TIDMSRE
RNS Number : 6098B
Sirius Real Estate Limited
05 June 2023
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
5 June 2023
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius", the "Group" or the
"Company")
Results for the year ended 31 March 2023
Sirius grows FFO growth to exceed EUR100 million FFO ambition
and supports 29% dividend increase
-Record like-for-like rental growth drives 9th consecutive year
of dividend increase-
Sirius Real Estate, the leading owner and operator of branded
business and industrial parks providing conventional space and
flexible workspace in Germany and the UK, announces its
consolidated financial results for the year to 31 March 2023.
Operating platform continues to drive rental and FFO growth
-- 36.9% increase in Funds from Operations ("FFO") to EUR102.1
million (2022: EUR74.6 million), exceeding five-year EUR100 million
target set in 2018
-- 7.7%* increase in Group annualised like-for-like rent roll to
EUR175.9* million (2022: EUR163.3* million) driven by continued
strong occupier demand in Germany and the UK
-- 24.5% increase in adjusted profit before tax to EUR96.0
million (2022: EUR77.1 million). Profit before tax decreased 48.5%
to EUR87.0 million (2022: EUR168.9 million) primarily as a result
of EUR7.7 million valuation deficit in 2023 compared to a EUR140.9
million surplus in the previous year.
-- 28.9% increase in FFO per share to 8.74c (2022: 6.78c)
-- 17.2% increase of EPRA EPS to 7.55c (2022: 6.44c)
Strong operational performance supporting 28.8% increase in
dividend and strong total return
-- 25.7% increase in H2 dividend to 2.98c per share (2022: 2.37c
per share), amounting to a 28.8% uplift in the total dividend for
the financial year to 5.68c (2022: 4.41c), maintaining the same
pay-out ratio of 65% of FFO
Income driven valuation gains
-- 1.1% increase in investment property book value** to
EUR2,123.0 million (2022: EUR2,100.1 million) as a result of strong
income growth and investment offsetting yield expansion
-- Gross yield of 7.3% (2022: 6.9%) in Germany and 9.3% net yield (2022: 8.0%) in the UK
-- EPRA NTA per share increasing by 0.8% to 108.11c (2022:
107.28c) demonstrating the resilience of the portfolio
-- Adjusted NAV per share increased 0.6% to 109.21c (2022: 108.51)
EUR90 million of asset recycling, with disposals achieved at 25%
combined aggregate premium to book value
-- EUR44.6 million of acquisitions with annualised NOI of EUR1.6
million and 54% occupancy completed across three new sites in
Germany
-- EUR45.8 million of disposals with annualised NOI of EUR1.8
million and limited further growth opportunity completed across six
transactions (including the sale of two non-income producing land
parcels in Germany), achieving a combined 25% aggregate premium to
the last book value prior to each sale
Strong balance sheet with only c. 5% of total debt expiring
within next 3 years
-- Total cash balance of EUR124.3 million, of which EUR99.2
million of cash in is unrestricted, providing capacity for further
acquisitions and investment (2022: EUR151.0 million total cash of
which EUR127.3 million unrestricted)
-- 41.6% net LTV (March 2022: 41.6%) and Net Debt to EBITDA of 7.7x
-- 95% of total Group debt (EUR975.1 million) at fixed interest
rates for a minimum of 3.25 years
-- EUR170.0 million facility with Berlin Hyp AG and EUR58.3
million Deutsche Pfandbriefbank facility have been refinanced (the
latter post period end) to 2030 extending the Group weighted debt
expiry to 5.0 years and increase the weighted cost of debt to 2.1%
(from 1.4% at 31 March 2022)
-- EUR1.6 billion of unencumbered assets (2022: EUR1.6 billion)
Outlook
-- The new financial year has started well, driven by continued
strong occupier demand in both markets and the Group continues to
trade in line with market expectations
-- In Germany, stable occupancy rates and the easing of energy
price pressures continue to offset wider macro-economic
concerns
-- Sirius continues to assess further growth options in both
Germany and the U.K. on an opportunistic basis, including recycling
of mature assets and reinvesting in value-add opportunities
-- Organic growth opportunities remain strong, particularly with
further investment into the portfolio as well as taking advantage
of the high inflationary environment
Commenting on the results, Andrew Coombs, Chief Executive
Officer of Sirius Real Estate, said: "Sirius has delivered another
positive set of annual results, with sizeable rental growth
underpinned by continued occupier demand for our high-quality and
affordable products in both Germany and the UK. This is now the
ninth consecutive year of like-for-like rental growth in excess of
5% in the year. This strong operational performance enabled us to
deliver a significant increase to the annual dividend, which rose
29%, and to surpass our EUR100 million FFO ambition, with a 37%
increase over the prior year to EUR102.1 million. The Company also
recycled EUR90 million of assets over the past twelve months,
including six disposals achieved at a 25% combined aggregate
premium to book value. We will continue to pursue an opportunistic
asset recycling programme where we see opportunities to crystalise
returns and drive value."
"Looking ahead, our outlook remains positive: our balance sheet
is strong, with cash reserves of EUR124 million and around 95% of
the Group's debt secured at fixed interest rates for at least the
next three years, and we continue to trade in line with market
expectations. While we remain alert to the potential impact of
ongoing global macro-economic uncertainty, Sirius remains well
placed to continue to deliver attractive returns for
shareholders."
Notes:
*Group rent roll and rental income KPI's have been translated
utilising a constant foreign currency exchange rate of GBP:EUR
1.1374, being the closing exchange rate as at 31 March 2023.
** Including leased investment properties
WEBCAST
There will be an in-person presentation for analysts/investors
at 08:30 BST (09.30 CET/ SAST) today, hosted by Andrew Coombs,
Chief Executive Officer, and Alistair Marks, Chief Investment
Officer and Interim Chief Financial Officer, at Peel Hunt's offices
(100 Liverpool Street, London, EC2M 2AT).
There will also be a live webcast available, which can be
accessed via the below link:
Webcast link:
https://stream.brrmedia.co.uk/broadcast/642c14c009685ed988693297
For further information:
Sirius Real Estate
Andrew Coombs, CEO / Alistair Marks, CIO and Interim CFO
+49 (0) 30 285 010 110
FTI Consulting (Financial PR)
Richard Sunderland / James McEwan / Talia Shirion / Sebastian
Duran de Huerta
+44 (0) 20 3727 1000
SiriusRealEstate@fticonsulting.com
NOTES TO EDITORS
About Sirius Real Estate
Sirius is a property company listed on the main and premium
market of the London Stock Exchange and the main board of the JSE
Limited. It is a leading owner and operator of branded business and
industrial parks providing conventional space and flexible
workspace in Germany and the UK. As of 31 March 2023, the Group's
portfolio comprised 140 assets let to 9,201 tenants with a total
book value of over EUR2.1 billion, generating a total annualised
rent roll of EUR178.3 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 nine 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
LEI: 213800NURUF5W8QSK566
JSE Sponsor: PSG Capital
Chairman's Statement
Delivering on our ambition
I am pleased to be writing this as part of my fifth Annual
Report as Chairman, and doubly pleased to be able to share another
year of strong financial and operational performance despite a
backdrop of continuing macroeconomic and geopolitical
volatility.
Sirius has continued to execute on its strategy, which remains
focused on the acquisition and management of business parks in
Germany and the UK that have attractive yields, value-add potential
or both. We use our operating platform to transform these parks
into higher quality assets through investment and intensive asset
management, an approach which has paid dividends as it has enabled
us to work with customers through this present inflationary
environment.
The Group continues to deliver on its ambition by capturing rent
roll growth in both Germany and the United Kingdom whilst
maintaining a robust balance sheet. The Board has authorised a
dividend of 2.98c per share for the second half of the financial
year, representing 65% of FFO, and a 25.7% increase on the 2.37c
per share dividend for the equivalent period in the prior year.
This brings the total dividend for the year to 5.68c, an increase
of 28.8% on the 4.41c dividend for the year ended 31 March
2022.
Our sustainability agenda
We are proud of the progress we are making on our work to build
a sustainable future, and we recognise the significant challenges
that our sector and portfolio face in the coming years. These
challenges remain a key focus in Board discussions and in
recognition of the importance of this work, our Chief Executive
Officer, Andrew Coombs, continues to chair the Sirius Real Estate
Sustainability and Ethics Committee.
Chief Marketing and Impact Officer Kremena Wissel, a
long-standing member of the Sirius leadership team, has overall
responsibility for leading our sustainability initiatives as well
as the broader ESG agenda within the operating companies. This year
we are establishing a dedicated internal ESG team, reporting to
Kremena, and we look forward to welcoming new colleagues who will
further strengthen and accelerate our progress in this space.
Board changes
In March, we announced the appointment of Chris Bowman as Chief
Financial Officer and we look forward to welcoming him to both the
business and the Board of Sirius Real Estate in August 2023. Chris
brings nearly 25 years' accounting, finance and capital markets
experience, and he is extremely well qualified to oversee the
continued financial management of the Group.
Chris' arrival allows Alistair Marks, our interim Chief
Financial Officer, to resume his focus on his role as Chief
Investment Officer, which he has held since January 2021. Alistair
will step down from the Sirius Board at this year's AGM in July and
I'd like to thank him for returning to his former Chief Financial
Officer role allowing us to undertake a thorough search for the
best permanent candidate, and for his continued valuable
contribution to the Group.
Our leadership team
A key strength of the business continues to be the long-term
commitment of our senior leadership team. Chief Executive Officer
Andrew Coombs has been with the business for more than ten years
and has recently restated his commitment to see through a number of
our sustainability and growth ambitions to 2030. Additionally, a
significant number of the executive leadership team have
accompanied Andrew on this journey, from rescuing and turning
Sirius around in 2010 to the successful multi-geography business it
is today. Andrew is supported by a core group of long-standing and
committed leaders throughout the business, including Kremena
Wissel, Rüdiger Swoboda, Alistair Marks and Craig Hoskins, all of
whom have been with Sirius for more than a decade as well as Tariq
Khader, Mo Jiwaji, Anthony Payne and Vince Scammell in the UK, all
of whom and remain dedicated to driving future growth.
Of course, these individuals are complemented by experienced
experts who are more recent joiners to the business - adding
capabilities in areas ranging from asset management to ESG and
more, including our BizSpace leadership team in the UK.
Looking ahead
There are a number of headwinds on the horizon that will
challenge the Sirius business model in the coming years, most
notably the higher interest rate environment, broader geopolitical
uncertainty, and cost-of-living challenges in both the UK and
Germany. We remain alert in assessing these risks, and the impact
they will have on our business, and take confidence from our strong
track record of adapting and thriving in the face of other
significant external challenges in recent years.
Overall, we are confident that the strength of our balance
sheet, our experienced management team and our long-term strategic
view will enable our business to continue its growth journey in the
years ahead. Sirius is well run and adaptive and continues to be a
highly investible proposition.
Thank you
On behalf of the Board, I would like to express my gratitude to
everyone across Sirius for their contributions to our successes in
this financial year. I look forward to the coming financial year
with confidence in our team, our business model and our ambition as
we build on our strong foundations.
Daniel Kitchen
Chairman
2 June 2023
"We are confident that the strength of our balance sheet, our
experienced management team and our long-term strategic view will
enable our business to continue its growth journey in the years
ahead."
Asset management review - Group highlights
Key highlights:
31 March 31 March Variance Variance
Metric 2023 2022 EUR %
------------------------------------ -------- -------- -------- --------
Total annualised rent roll* (EUR
million) 178.3 165.0 13.3 8.1
Like-for-like annualised rent roll*
(EUR million) 175.9 163.3 12.6 7.7
Average rate (EUR) per sqm* 8.11 7.39 0.72 9.7
Average rate (EUR) per sqm like for
like* 8.10 7.40 0.70 9.5
Total occupancy (%) 83.9 85.3 - (1.6)
Like for like occupancy (%) 84.5 85.6 - (1.3)
Cash in bank (EUR million) 99.2 127.3 (28.1) (22.1)
Cash collection (%) 98.6 98.4 - 0.2
------------------------------------ -------- -------- -------- --------
* The Company has chosen to disclose certain Group rental income
figures utilising a constant foreign currency exchange rate of
GBP:EUR 1.1374, being the closing exchange rate as at 31 March
2023.
Introduction
The last financial year has been one of a changing environment
and uncertainty around the European commercial real estate market,
which is why the Company has decided to concentrate on what it has
rather than continue to grow acquisitively as it has over the last
years. Sirius' management has always indicated that the Company's
business model works well in both good and bad times and now is the
opportunity to show that. Its ability to provide a mix of
conventional and flexible space allows it to adapt to a changing
environment and continue to grow organically when others in the
market face difficulty.
The focus over the last twelve months has been to continue the
Group's capex investment into its vacant space with the aim of
continuing to increase occupancy and rate achieved per lettable sqm
as well as to replenish this opportunity within its portfolio
through selective asset recycling. Success has been achieved on all
fronts with substantial like-for-like rental income increases in
both the UK and Germany along with some excellent recycling of
equity from mature or non-core assets with limited growth
opportunity into assets with substantial value-add and income
growth opportunity which can be realised over the next few years.
As such, the Company has seen record like-for-like rental growth
but the total shareholder returns, including NAV growth, seen in
the last financial year have not reached similar hights.
Nevertheless, the Company has a solid foundation to continue to
provide excellent risk-adjusted returns for its stakeholders over
the next few potentially turbulent years.
Operational platform continues to capture rental growth
Despite the current economic environment, the Company continues
to see strong demand for the range of conventional and flexible
spaces it offers both in the UK and in Germany. Across both Germany
and the UK, the Company was able to sign 2,737 new deals, occupying
203,263 sqm and providing new annual contractual revenue of
EUR28.0* million.
As such, like-for-like annualised rent roll increased by 7.3% in
Germany and 8.7% in the UK, which blends to 7.7*% at Group level.
This represents the ninth consecutive year of like-for-like rent
roll growth in excess of 5%. These improvements were driven by an
8.1% and 14.8% increase in the like-for-like average rental rate in
Germany and the UK respectively . However, the Group's total
occupancy was lower at 83.9% (31 March 2022: 85.3%), reflecting a
slight drop in like-for-like occupancy due to the focus on price in
both Germany and the UK as well as some recycling of mature assets
into value-add assets with more vacancy and hence opportunity. The
strong demand that Sirius is able to generate for its offerings
allows the Company to focus on capturing inflationary increases as
well as reversion within its existing tenant base. Achieving the
largest like-for-like rental growth in the Company's history whilst
also increasing the opportunity within its vacancy puts Sirius in
an excellent position to continue this growth over the next few
years without the need for substantial acquisitive growth.
EUR178.3m
total annualised rent roll
EUR8.11 per sqm
average rate
98.6%
cash collection rate
Asset management review - Germany
Key highlights:
31 March 31 March Variance
Metric 2023 2022 Variance %
----------------------------------------- -------- -------- -------- --------
Total annualised rent roll (EUR million) 123.1 113.7 9.4 8.3
Like-for-like annualised rent roll
(EUR million) 120.7 112.5 8.2 7.3
Average rate (EUR) per sqm 6.86 6.31 0.55 8.7
Average rate (EUR) per sqm like for
like 6.83 6.32 0.51 8.1
Total occupancy (%) 83.4 84.2 - (1.0)
Like for like occupancy (%) 84.0 84.5 - (0.6)
Cash collection (%) 98.4 98.4 - -
----------------------------------------- -------- -------- -------- --------
German market overview
As the German economy recovered from the effects of the Covid-19
pandemic, market uncertainty increased due to the escalation of the
Ukraine war and the resulting energy and cost of living crisis. The
impacts of these were softened by initiatives of the German
Government such as the "Energiepreisbremse" where the consumers
were sheltered from increasing costs up to 80% of the previous
year's consumption as well as other initiatives such as not being
required to pay for energy consumption for the month of December.
These savings, which are to be passed onto the consumer, dampened
some of the negative impact of the inflationary pressures faced by
companies operating within the German economy. Nevertheless, this
has resulted in a slow-down in the German economy where only 1.8%
GDP growth was recorded in 2022 compared to 2.7% in 2021. The
increase in prices, coupled with dampening foreign demand and
supply chain bottlenecks, has created uncertainty, which when
combined with higher costs of borrowing has resulted in decisions
for take-up of larger industrial, logistics and in particular
office spaces being delayed. Conversely the demand for flexible and
smaller spaces has been increasing which is an area in which Sirius
can take advantage. Despite these challenges and in light of the
supply chain bottlenecks, the Company has still managed to let some
larger storage spaces in the year. Overall, however the occupier
market has been more challenging over the last year than it was
prior to the Covid-19 pandemic.
The Company has been able to reduce the impact of higher energy
prices on its tenants through some fixed-price contracts it put in
place before the large increases came into force. This, coupled
with the competitive rental rates that Sirius offers its tenants,
positions the Company well to continue to support its tenant base
and grow its rental income for many years to come. The Company
continued to adopt a highly dynamic and flexible approach to its
marketing activities with several initiatives launched based on
data generated from detailed analysis of online search patterns and
take advantage of the increase in demand for storage and flexible
office space. Flexibility and competitive pricing continued to be
key factors in decision making. Accordingly, the Company generated
an increased number of enquiries compared with the prior year which
resulted in an increase in the volume of sales by sqm.
EUR123.1m
total annualised rent roll
EUR6.86 per sqm
average rate
98.4%
cash collection rate
Lettings and rental growth
The German portfolio recorded a like-for-like increase in its
annualised rent roll of 7.3% to EUR120.7 million (31 March 2022:
EUR112.5 million) whilst the total annualised rent roll increased
in the year end by EUR9.4 million to EUR123.1 million (31 March
2022: EUR113.7 million). Of this growth EUR8.2 million related to
organic growth, EUR1.2 million was lost from disposals and EUR2.4
million represented the impact from acquisitions.
The EUR8.2 million organic growth was made up of EUR6.3 million
coming from uplifts from existing tenants, either through
contractual lease indexation or increases upon renewal, as well as
EUR1.9 million from the net of move-ins over move-outs. The latter
can be further broken down into move-outs of 164,562 sqm that were
generating EUR14.7 million of annualised rent roll at an average
rate of EUR7.47 per sqm being offset by move-ins of 154,110 sqm
generating EUR16.6 million of annualised rent roll at an average
rate of EUR8.98 per sqm. The combination of the above has resulted
in like-for-like rate per sqm increasing by 8.1% to EUR6.83 (31
March 2022: EUR6.32) demonstrating the ability of the Company to
realise the benefits of the investments into its portfolio, even in
challenging markets.
Like-for-like occupancy in Germany has decreased by 0.5% to
84.0% (31 March 2022: 84.5%) due to some large known move-outs in
the first half of the financial year. The Company has nevertheless
made further progress in investing in its sub-optimal vacant space
through its capex investment programme, so the space available to
let has increased significantly throughout the year. Additionally,
the acquisitions made during the year resulted in a further 18,277
sqm of vacant space, with upgrade potential, being added to this
opportunity. Consequently, Sirius has been able to grow
like-for-like annualised rent roll by 7.3% in the year whilst
further increasing the opportunity to add value and grow income
from its vacancy, especially through Sirius' well documented capex
investment programme which is described in more detail later in
this section.
The movement in annualised rent roll is illustrated in the table
below:
EURm
----------------------------------- ------
Annualised rent roll 31 March 2022 113.7
Move-outs (14.7)
Move-ins 16.6
Contracted uplifts 6.3
Disposals (1.2)
Acquisitions 2.4
----------------------------------- ------
Annualised rent roll 31 March 2023 123.1
----------------------------------- ------
The key to another excellent year of organic rental growth,
despite a more challenging market, is the Company's ability to
generate so many enquiries for its vacant space. This is because
most of the enquiries Sirius receives are generated through the
Company's in-house marketing platform which is able to adapt to
changing markets and always attract a substantial amount of the
demand towards Sirius' offerings. Total enquiries for the year were
15,412 compared to 16,180 enquiries generated in the period ended
31 March 2022, which, considering the market conditions, was
another strong performance. However, whilst generating leads is
important, the ability to convert these into new lettings is
paramount. The Sirius operating platform was able to convert these
enquiries at a rate of 12% (31 March 2022: 13%) which is indicative
of the quality of lead Sirius is able to generate as well as the
procedures it has in place to make the sale. As such, a total of
164,184 sqm of space was let (31 March 2022: 162,102 sqm)
contributing EUR17.1 million (31 March 2022: EUR15.0 million) to
the annual rent roll at an average rate of EUR8.68 per sqm (31
March 2022: EUR7.72 per sqm). This strong lettings performance has
more than offset the large move-outs mentioned above and, when
coupled with the Company's ability to be able to take advantage of
the high inflationary environment and the improvements it is making
to its properties, means that Sirius has had another strong year of
organic growth and is well positioned to take advantage of further
growth over the near term.
Despite those large move-outs, overall tenant retention in the
period was encouraging with a 75% renewal rate by sqm in the period
being successfully extended (31 March 2022: 75%). Overall, the
continued positive performance in marketing, lettings and renewals
provides a clear demonstration of the ability of the Company to
grow against the backdrop of rapidly changing market dynamics,
which included the Covid-19 pandemic, the war in Ukraine, the
energy crisis in Germany and resulting inflationary pressures.
Cash collection
The Company continued its trend of strong cash collection
performance in the period. Sirius is very focused on cash
collection and the advantage of its substantial operating platform
is very evident here. The experienced cash collection team,
combined with the on-site staff who have established strong
relationships with our top tenants, has been key to keeping cash
collection rates steady at 98.4% (31 March 2022: 98.4%), even
though total billings (net of VAT) increased by 12.0% to EUR182.6
million from EUR163.0 million in 31 March 2022. This demonstrates
the resilience of Sirius' tenant base and strength of the Company's
cash collection initiatives.
As at year end uncollected debt amounted to EUR2.9 million (31
March 2022: 2.6 million) which mainly related to recently billed
service charge and repair and maintenance balancing for prior
years. The outstanding rent and service charge prepayments were
EUR5.1 million and EUR1.3 million respectively. The Group has
issued 48 deferred payment plans (31 March 2022: 10 deferred
payment plans) amounting to EUR0.3 million (31 March 2022: EUR0.6
million) and immaterial write offs in the period (31 March 2022:
EUR0.01 million). Whilst the number of deferred payment plans has
increased, the overall value has decreased. The Company expects to
collect most of the outstanding debt for the period over the next
twelve months through its regular debt collection activities.
Asset recycling
Given the uncertainty around property values and occupier demand
on the back of interest rate increases, changes in office working
patterns and ESG, the Company has decided to hold back on
substantial acquisitive growth and focus on selective asset
recycling whilst retaining strong cash reserves to allow the
Company to strike when new opportunities arise. Additionally asset
recycling remains an important factor in proving values and
replenishing the opportunity from vacancy which is realised through
the Group's capex investment programme. The Company was able to
complete over EUR90 million in deals in the period.
A summary of the acquisitions and disposals that completed or
were notarised in the year is detailed in the table below:
Acquisitions
Annualised
Total Total rental Annualised
investment acquired income NOI
Date EURm sqm EURm EURm Occupancy Gross yield*
---------------- ------- ----------- --------- ---------- ---------- --------- ------------
Düsseldorf Oct-22 39.8 34,310 2.1 1.6 55% 5.3%
Dreieich II Oct-22 3.9 5,648 0.2 - 54% 5.1%
Potsdam Villa May-22 0.9 239 - - 0% 0%
---------------- ------- ----------- --------- ---------- ---------- --------- ------------
Total 44.6 40,197 2.3 1.6 54% 5.2%
------------------------- ----------- --------- ---------- ---------- --------- ------------
* Includes purchaser costs.]
A summary of the opportunities and characteristics of each asset
acquired in the period is detailed below.
-- The Düsseldorf asset was purchased for total acquisition costs of 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 sufficient day-one net income to replace most of the income lost from disposals. The Company has a number of assets in the Düsseldorf area and Sirius expects to benefit from meaningful operational synergies by adding another.
-- Dreieich comprises a warehouse asset located in a
well-developed commercial area in Dreieich, Germany, that is
strategically adjacent to an existing property owned by Sirius.
With total acquisition costs of 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 in the area for the last five years. Sirius currently
owns and operates at 32 self-storage locations across Germany and
this would be one of the largest and most significant.
-- The final completed purchase was of a 239 sqm office building
in Potsdam, Germany, which strategically gives Sirius ownership of
an asset located at an entrance to one of the Company's existing
business parks. With total acquisition costs of 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 marketing and sales capabilities within the operating
platform are part of several asset management disciplines that
provide the Company with a significant competitive advantage over
other owners of light industrial and business park assets in
Germany. This allows Sirius to be more flexible with how it
configures and offers its vacant space which should result in the
Company being able to more easily fill up and transform these newly
acquired sites and hence make the high returns at the asset level
which underpins the Company's significant organic growth it
generates each year.
Disposals
Total Annualised
sales Total rental Annualised
price disposal income NOI Gross yield
Date EURm sqm EURm EURm Occupancy *
---------------- ------- ------ --------- ---------- ---------- --------- -----------
Magdeburg Apr-22 13.8 32,070 1.3 1.0 69% 9.4%
Heiligenhaus
Land (3,200
sqm) Sep-22 1.0 - - - - -
Camberwell (UK) Jul-22 18.8 3,224 0.4 0.3 91% 2.1%
Ipswich (UK) Dec-22 3.4 7,616 - (0.2) - -
Wuppertal** Apr-23 8.8 15,006 0.7 0.7 79% 8.0%
Dresden Land
(413 sqm)** Apr-23 - - - - - -
---------------- ------- ------ --------- ---------- ---------- --------- -----------
Total 45.8 57,916 2.4 1.8 64% 5.2%
------------------------- ------ --------- ---------- ---------- --------- -----------
* Calculated on net purchase price.
** Asset held for sale, completed 1 April 2022.
Over the last twelve months, the Group sold six assets
(including the sale of two non-income producing land parcels in
Germany) for a total sales price of EUR45.8 million compared with a
book value of EUR36.7 million, representing a 25% aggregate premium
to the last book value prior to each sale. These disposals of
mature and non-core assets at or above book value demonstrate the
Company's ability to recycle its assets even in uncertain market
conditions.
German capex investment programmes
The Group's capex investment programme on the German assets has
historically been focused on the transformation of the poor-quality
vacant space that is typically acquired at very low cost due to it
being considered as structural vacancy by former owners. The
transformation and take up of this space has not only resulted in
significant income and valuation improvements for the Company but
has also yielded significant improvements in service charge cost
recovery and therefore further increased net operating income. The
programme started in 2015 and to date 428,037 sqm of space has been
fully transformed for an investment of EUR64.1 million. As at 31
March 2023, this space was generating EUR27.1 million in annualised
rent roll (at 73% occupancy) plus the substantial improvement in
the recovery of service charge costs. This transformed space has
also been the major contributor towards the large valuation
increases seen on the portfolio over the last eight years.
In addition to the space that has been completed and let or is
currently being marketed, a total of approximately 40,920 sqm of
space is either in progress of being transformed or is awaiting
approval to commence transformation. A further EUR10.5 million is
expected to be invested into this space on top of the EUR1.8
million already spent, and, based on achieving budgeted occupancy,
is expected to generate incremental annualised rent roll in the
region of EUR3.8 million.
The details of the capex investment programme on this
low-quality vacant space is detailed below:
Annualised
rent
Annualised roll * Rate
rent roll
* increase Occupancy Rate per sqm
achieved achieved achieved
Investment Actual increase to Occupancy to per sqm to
March March March
budgeted spend budgeted 2023 budgeted 2023 budgeted 2023
Combined capex
programmes Sqm EURm EURm EURm EURm % % EUR EUR
------------------ ------- ---------- ------ ---------- ----------- --------- ---------- --------- ----------
Completed 428,037 69.5 64.1 26.9 27.1 82% 73% 6.38 7.25
In progress 9,292 2.3 1.8 1.0 - 90% - 10.23 -
To commence
in next financial
year 31,628 10.0 - 2.8 - 84% 73% 8.90 -
------------------ ------- ---------- ------ ---------- ----------- --------- ---------- --------- ----------
Total 468,957 81.8 65.9 30.7 27.1 82% 73% 6.62 -
------------------ ------- ---------- ------ ---------- ----------- --------- ---------- --------- ----------
* See the Glossary section of the Annual Report and Accounts 2023.
In addition to the capex investment programme on acquired
"structural" vacant space, Sirius continually identifies and looks
for opportunities to upgrade the space that is vacated each year as
a result of move-outs. Within the existing vacancy at 31 March
2023, the Company has identified approximately 47,000 sqm of
recently vacated space that has potential to be significantly
upgraded before it is re-let. This space will require an investment
of approximately EUR6.8 million and, at current rates, is expected
to generate around EUR3.9 million in annualised rent roll when
re-let. Upgrading this vacated space allows the Company to enhance
the reversionary potential of the portfolio whilst significantly
improving the quality, desirability and hence value of not only the
space that is invested into but the whole site.
The analysis below details the sub-optimal space and vacancy at
31 March 2023 and highlights the opportunity from developing this
space.
Vacancy analysis - March 2023
------------------------------ ---------
Total space (sqm) 1,792,670
Occupied space (sqm) 1,494,727
Vacant space (sqm) 297,943
Occupancy 83%
------------------------------ ---------
Capex
% of total investment ERV *
space Sqm EURm (post investment)
---------------------------------- ---------- ------- ----------- ------------------
Structural vacancy 2% 40,024 - -
---------------------------------- ---------- ------- ----------- ------------------
Capex investment programme 2% 38,891 (10.5) 3.8
Recently vacated space 3% 47,155 (6.8) 3.9
---------------------------------- ---------- ------- ----------- ------------------
Total space subject to investment 5% 86,046 (17.3) 7.7
---------------------------------- ---------- ------- ----------- ------------------
Lettable vacancy:
Smartspace vacancy 2% 38,635 - 4.4
Other vacancy 7% 133,238 (2.1) 9.4
---------------------------------- ---------- ------- ----------- ------------------
Total lettable space 9% 171,873 (2.1) 13.8
---------------------------------- ---------- ------- ----------- ------------------
Total vacancy 17% 297,943 (19.4) 21.5
---------------------------------- ---------- ------- ----------- ------------------
* See the Glossary section of the Annual Report and Accounts 2023.
The German portfolio's headline 83% occupancy rate means that in
total 297,943 sqm of space is vacant as at 31 March 2023. When
excluding the vacancy which is subject to investment (5% of total
space), and the structural vacancy which is not economically viable
to develop (2% of total space), the Company's occupancy rate based
on space that is readily lettable is approximately 90%.
Whilst the capex investment programmes are a key part of Sirius'
strategy, they represent one of several ways in which the Company
can organically grow income and capital values. A wide range of
asset management capabilities including the capturing of
contractual rent increases (especially whilst inflation is high),
uplifts on renewals and the re-letting of space at higher rates are
also expected to contribute to the Company's annualised rent roll
growth going forward.
Whilst the Company will continue to look to asset recycling to
replenish the vacancy which is let up after transformation, the
Company maintains a risk adjusted strategy and expects to continue
to hold a significant amount of core mature assets in order to
maintain a balanced portfolio that provides a combination of
stable, long-term financeable income with value-add assets with
growth potential.
Well-diversified income and tenant base
Against the backdrop of continued market disruption, be it
geopolitical conflict or a high inflationary environment, the
importance of a well-diversified tenant base and wide range of
products is evident. Sirius' portfolio includes production, storage
and out of town office space that caters to multiple uses and a
range of sizes and types of tenants. The Company's business model
is underpinned by its tenant mix which provides stability through
its large long-term anchor tenants and opportunity through the SME
and flexible individual tenants.
The Group's large anchor tenants are typically multinational
corporations occupying production, storage and related office space
whereas the SMEs and individual tenants occupy space on both a
conventional and a flexible basis including space marketed under
the Company's popular Smartspace brand which provides tenants with
a fixed cost and maximum flexibility. The Company's largest single
tenant contributes 2.1% of total annualised rent roll whilst 7.9%
of its annualised rent roll comes from government tenants.
SMEs in Germany, the Mittelstand, are typically defined as
companies with revenues of up to EUR50.0 million and up to 500
employees. SME tenants remain a key target group which the
Company's internal operating platform has demonstrated an ability
to attract in significant volumes as evidenced through the high
number of enquiries that are generated each month, mainly through
the Company's own marketing channels. The wide range of tenants
that the Sirius marketing and sales team is able to attract is a
key competitive advantage for the Company and results in a
significantly de-risked business model when compared to other
owners of multi-tenanted light industrial and business park
assets.
The table below illustrates the diverse nature of tenant mix
within the Sirius portfolio at the end of the reporting period:
No. of % of total
tenants Annualised annualised
as at % of rent roll rent roll Rate
31 March Occupied occupied * * per sqm
2023 sqm sqm EURm % EUR
--------------------- --------- --------- --------- ---------- ----------- --------
Top 50 anchor
tenants(1) 50 668,734 45% 47.5 38% 5.91
Smartspace SME
tenants(2) 2,868 70,113 5% 8.3 7% 9.92
Other SME tenants(3) 2,939 755,880 50% 67.3 55% 7.42
--------------------- --------- --------- --------- ---------- ----------- --------
Total 5,857 1,494,727 100% 123.1 100% 6.86
--------------------- --------- --------- --------- ---------- ----------- --------
(1) Mainly large national/international private and public tenants.
(2) Mainly small and medium-sized private and public tenants.
(3) Mainly small and medium-sized private and individual tenants.
* See the Glossary section of the Annual Report and Accounts 2023.
Smartspace and First Choice
Sirius' Smartspace products are designed with flexibility in
mind, allowing tenants to benefit from a fixed cost which continues
to be desirable even in challenging market conditions. The majority
of Smartspace has been developed from space that is either
sub-optimal or considered to be structurally void by most light
industrial real estate operators. Following conversion, the area is
transformed into space that can be let at significantly higher
rents than the rest of the business park and, as a result, is
highly accretive to both income and value. The Company was able to
add 11,006 sqm of Smartspace offering from 96,390 sqm in the prior
year to 107,396 sqm which is an increase of more than 11%. Whilst
this has reduced total Smartspace occupancy to 65% (31 March 2022:
73%), the Company has been able to capture rate increases across
all of its product lines which has more than offset this lower
occupancy.
The most significant growth occurred in the Smartspace storage
product. The Company's market research through its marketing and
sales platforms indicated strong demand in this sector and Sirius
was able to act accordingly to capture some of this. The addition
of 6,569 sqm of Smartspace storage helped grow this product line's
rental income contribution by EUR0.4 million.
Additionally a further 2,374 sqm of First Choice Office space
and 4,661 sqm of Smartspace Office space were created in the period
which contributed to rental growth of EUR0.1 million and EUR0.3
million respectively.
The total amount of Smartspace in the portfolio at the year end
was 107,396 sqm (31 March 2022: 96,390 sqm), generating EUR8.4
million (31 March 2022: EUR7.7 million) of annualised rent roll
which equates to 6.8% of the Company's total annualised rent roll.
Average rate per sqm continued to increase by 7.5% year on year,
highlighting the premium pricing opportunity associated with
flexibility.
The table below illustrates the contribution of each of the
Smartspace products:
Annualised
rent roll % of total Rate *
* Smartspace per sqm
(excl. annualised (excl.
service rent roll service
Smartspace product Occupied Occupancy charge) * charge)
type Total sqm sqm % mEUR % EUR
-------------------- --------- -------- --------- ---------- ----------- --------
First Choice office 7,491 3,231 43% 0.9 11% 22.31
SMSP office 36,692 24,265 66% 3.0 36% 10.28
SMSP workbox 5,972 5,510 92% 0.5 6% 7.02
SMSP storage 54,386 35,942 66% 3.6 43% 8.35
SMSP container - - - 0.3 3% n/a
-------------------- --------- -------- --------- ---------- ----------- --------
SMSP subtotal 104,541 68,948 66% 8.3 99% 9.93
-------------------- --------- -------- --------- ---------- ----------- --------
SMSP FlexiLager 2,855 1,166 41% 0.1 1% 9.21
-------------------- --------- -------- --------- ---------- ----------- --------
SMSP total 107,396 70,114 65% 8.4 100% 9.92
-------------------- --------- -------- --------- ---------- ----------- --------
* See the Glossary section of the Annual Report and Accounts 2023.
Asset management review - UK
Key highlights:
31 March 31 March Variance
Metric 2023 2022 Variance %
----------------------------------------- -------- -------- -------- --------
Total annualised rent roll (GBP million) 48.5 45.1 3.4 7.0
Like-for-like annualised rent roll
(GBP million) 48.5 44.7 3.8 8.5
Average rate (GBP) per sq ft 13.39 11.69 1.70 14.5
Average rate (GBP) per sq ft like
for like 13.39 11.67 1.72 14.7
Total occupancy (%) 86.5% 90.5% - (4.6)
Like-for-like occupancy (%) 86.5% 90.5% - (4.6)
Cash collection (%) 99.3% 99.6% - (0.3)
----------------------------------------- -------- -------- -------- --------
Lettings and rental growth
The UK recorded a like-for-like increase in its annualised rent
roll of 8.5% to GBP48.5 million (31 March 2022: GBP44.7 million)
equating to a 4.5% increase in euro terms to EUR55.2 million (31
March 2022: EUR52.8 million) due to a weakening British pound
compared to the euro. The total annualised rent roll increase in
the year was GBP3.4 million (EUR3.9 million), with GBP3.9 million
(EUR4.4 million) organic growth offset by asset disposals totalling
GBP0.6 million (EUR0.7 million).
Encouragingly, like-for-like average rate per sq ft increased by
14.7% to GBP13.39 (31 March 2022: GBP11.67), equating to a 10.4%
increase in euro terms to EUR13.66 (31 March 2022: EUR12.37),
reflecting management's ability to capture rental growth in the
current inflationary environment. In order to capture rate
increases in excess of inflation, we have been comfortable ceding a
small amount of occupancy in return for these higher rates and we
believe this positions us well as the economy begins to recover.
Like-for-like occupancy decreased to 86.5% from 90.5% as a result
of the price led strategy as well as a small number of known large
leavers.
The increase in annualised rent roll over the period can be
broken down into move-outs of 1,084,070 sq ft (100,713 sqm)
generating GBP17.7 million (EUR20.4 million) of annualised rent
roll at an average rate of GBP16.29 per sq ft (EUR16.92 per sqm)
being offset by move-ins of 880,861 sq ft that were generating
GBP17.6 million (EUR20.3 million) of annualised rent roll at an
average rate of GBP19.94 per sq ft (EUR20.70 per sqm).
Additionally, rental uplifts on existing tenants added a further
GBP4.0 million to the annualised rent roll during the period. As
mentioned above two assets were disposed of during the period which
accounted for a GBP0.5 million (EUR0.5 million) reduction in
annualised rent roll.
The movement in annualised rent roll is illustrated in the table
below:
GBPm
----------------------------------- ------
Annualised rent roll 31 March 2022 45.1
Disposals (0.5)
Move-ins 17.6
Move-outs (17.7)
Uplifts on existing tenants 4.0
----------------------------------- ------
Annualised rent roll 31 March 2023 48.5
----------------------------------- ------
Despite a challenging market, driven by market uncertainty over
inflation, the UK operating platform generated a healthy number of
enquiries for the year, totalling 15,511 for the period ended 31
March 2023 (4.5 months to 31 March 2022: 6,647). In the period 963
deals were secured totalling 420,647 sq ft (39,079 sqm) with an
average deal per sqm of 437 sq ft (40 sqm). During the second half
of the year the Company averaged 97 deals per month compared to an
average of 63 deals per month in the first six months. The annual
sales conversion rate of 6.2% was an improvement on the 5.6% for
the 4.5 months to 15 November 2021 reflecting the management's
focus on improving the sales and marketing functions within
BizSpace.
Cash collection
Through a combination of its experienced cash collection team
and the team's active management of its tenant base, the cash
collection rates remained steady at 99.3% (4.5 months to 31 March
2022: 99.6%). The 99.3% cash collection rate can analysed as total
net of VAT billing amounting to GBP48.3 million, total uncollected
debt at year end amounting to GBP0.3 million (EUR0.4 million) and
GBP29,859 (EUR34,562) written off during the period. There are no
deferred payment plans in place and the Company expects to collect
the majority of the outstanding debt at year end through its
regular debt collection activities.
GBP48.5m
total annualised rent roll
GBP13.39 per sq. ft
average rate
99.3%
cash collection rate
Site Investment
BizSpace has historically invested in its sites in order to
maintain and upgrade its spaces which allows it to adapt to changes
in tenant demand. In the period under review the Company invested a
total of GBP4.8 (EUR5.6) million into its sites focused primarily
on improving the condition of spaces to drive occupancy and price.
The Company expects to identify further opportunities to invest
into its assets in the new financial year whilst continuing to
progress its ESG-related investment in order to align itself with
the wider Group.
Well-diversified income and tenant base
BizSpace's portfolio includes light industrial, studio, out of
town office space and storage that caters to multiple usages and a
range of sizes and types of tenants. As a result, the Company's
business model is underpinned by a well-diversified tenant
base.
The Company's top 100 tenants, which are typically large
corporates, account for 24% of the annualised rent roll with the
next 900 tenants accounting for 46% of annualised rent roll. The
remaining 30% of annualised rent roll relates to over 2,000 SME and
micro-SME tenants which occupy 28% of the overall estate.
The table below illustrates the diverse nature of tenant mix
within the Sirius portfolio at the end of the reporting period:
No. of
tenants
as at % of Annualised % of total Rate
31 March Occupied occupied rent roll annualised per sq
2022 Sq ft m sq ft GBPm rent roll ft GBP
---------------- --------- -------- --------- ---------- ----------- -------
Top 100 tenants 100 0.9 25% 11.6 24% 12.90
Next 900 900 1.7 47% 22.2 46% 12.54
Remaining SME 2,344 1.0 28% 14.7 30% 15.43
---------------- --------- -------- --------- ---------- ----------- -------
Total 3,344 3.6 100% 48.5 100% 13.39
---------------- --------- -------- --------- ---------- ----------- -------
SMEs in the UK are typically defined as companies with revenues
of up to GBP50.0 million and up to 250 employees. The Company's
internal operating platform and product offering have a strong
track record of attracting and retaining customers in this segment
of the market which is expected to continue to grow as a result of
structural trends impacting the UK market.
Financial review
EUR100 million FFO milestone achieved
"Sirius has achieved its EUR100 million funds from operations
goal with further organic growth as the Company continues its price
driven strategy in both Germany and the UK."
Alistair Marks
Interim Chief Financial Officer
Substantial FFO growth
The Company has reported in excess of EUR100 million in FFO for
the first time, a five year target that was set in FY18/19 when the
FFO run rate was below EUR50 million. Sirius recorded FFO of
EUR102.1 million which represents a 36.9% increase over the EUR74.6
million FFO reported last year. Whilst a significant portion of
this growth has come from the full year effect of acquisitions that
were made in the last financial year, including BizSpace, Sirius
has benefited from substantial organic growth and excellent asset
recycling despite the challenging markets which are continuing to
be affected by instability from the Ukraine conflict and the cost
of living crisis in both Germany and the UK. The main driver of
organic growth was the 7.7%(1) increase in like-for-like rent roll
which increases to 8.1%(1) rent roll growth when incorporating the
effect of asset recycling and taking the total rent roll of the
Group. This level of like-for-like rental growth was a record for
the Company and has mainly come from the Group's price driven
strategy which focuses on replacing rental contracts which are
under-rented with those closer to market rates whilst also
capturing inflationary increases where it can. This has resulted in
a slight decline in the Group's total occupancy but the rent growth
numbers speak to the success of this strategy.
Trading performance and earnings
The Company has reported a profit before tax in the year ended
31 March 2023 of EUR87.0 million (31 March 2022: EUR168.9 million),
representing a decrease of 48.5% from the prior year. This
reduction in profit is mainly due to the FFO growth mentioned above
being offset by a net valuation deficit of EUR7.7 million (EUR21.4
million valuation increase less EUR29.9 million capex) being
reported in the period whereas in the prior year a net valuation
gain of EUR140.9 million (EUR163.5 million valuation increase less
EUR22.6 million capex) was reported. The EUR27.5 million increase
in FFO to EUR102.1 million (31 March 2022: EUR74.6 million)
included BizSpace contributing EUR 25.5 million, its first full
year contribution to the Group (31 March 2022: EUR5.8 million). The
organic growth within this FFO increase came mainly from the 6.4%
and 7.7%(1) increases in like-for-like annualised rental income
achieved in the March 2022 and March 2023 years respectively.
Both the German and UK businesses saw strong demand for their
offerings which translated to the excellent rental growth in the
period as explained in more detail in the Asset management section
of this report. Additionally, Sirius was able to achieve further
improvements to its ancillary income streams which have more than
offset some increases in overhead costs due to inflation as well as
increasing the capacity of its management platform.
Further acquisitive growth was limited because the Company has
decided to pause its large-scale acquisitive growth plans in favour
of selective asset recycling due to the uncertainties that exist in
the property investment markets within which Sirius operates. As
such, the Company can focus more on its organic growth
opportunities of which there remain plenty.
The split between the contribution from German operations and
BizSpace for the year ended 31 March 2023 is set out in the table
below.
Germany UK Group
EURm EURm EURm
----------------- ------- ----- -----
NOI 116.1 37.3 153.4
FFO 75.4 26.7 102.1
Profit after tax 53.1 26.1 79.7
----------------- ------- ----- -----
(1) The Company has chosen to disclose certain Group rental
income figures utilising a constant foreign currency exchange rate
of GBP:EUR 1.1374, being the closing exchange rate as at 31 March
2023.
On a per share basis, most of what was discussed above is
reflected with only a small number of new shares being issued in
the period. The impact of valuations stabilising resulted in a
49.4% decrease in basic EPS for the period to 6.82c per share.
Adjusted EPS, basic EPRA EPS and diluted EPRA EPS, which exclude
the impact of valuations described above, increased by
approximately 22.8%, 17.2% and 17.1% respectively reflecting the
strong operational performance in the year.
31 March 31 March
2023 2022
Earnings cents per Earnings cents per Change
EURm No. of shares share EURm No. of shares share %
----------------- -------- ------------- ---------- -------- ------------- ---------- ------
Basic EPS 79.6 1,167,757,975 6.82 147.9 1,097,082,162 13.48 (49.4)
Diluted EPS 79.6 1,183,626,763 6.73 147.9 1,112,360,781 13.29 (49.4)
Adjusted EPS* 92.9 1,167,757,975 7.96 71.1 1,097,082,162 6.48 22.8
Basic EPRA EPS 88.2 1,167,757,975 7.55 70.7 1,097,082,162 6.44 17.2
Diluted EPRA EPS 88.2 1,183,626,763 7.45 70.7 1,112,360,781 6.36 17.1
----------------- -------- ------------- ---------- -------- ------------- ---------- ------
* See note 12 and the Business analysis section of the Annual Report and Accounts 2023.
Sirius converted the UK business into a UK Real Estate
Investment Trust ("REIT") with effect from 1 April 2022, resulting
in BizSpace no longer being subject to UK corporation tax on income
from its property rental business, as well as on profits on
disposals of assets.
Income
Total revenue reported in the period, which comprises rent, fee
income relating to Titanium, other ancillary income from investment
properties, and service charge income, increased from EUR210.2
million for the 31 March 2022 year to EUR270.1 million this year.
The detail of the EUR59.9 million increase in income is shown on
the following table.
Year ended Year ended
31 March 2023 31 March 2022
--------------------- ---------------------
Germany UK Total Germany UK Total
EURm EURm EURm EURm EURm EURm
---------------------------- ------- ----- ----- ------- ----- -----
Rental and other
income from investment
properties 125.5 33.3 158.8 108.7 15.3 124.0
Service charge income
from investment properties 66.6 24.0 90.6 55.0 5.7 60.7
Rental and other
income from managed
properties 10.9 - 10.9 10.9 - 10.9
Service charge income
from managed properties 9.8 - 9.8 14.6 - 14.6
---------------------------- ------- ----- ----- ------- ----- -----
Revenue 212.8 57.3 270.1 189.2 21.0 210.2
---------------------------- ------- ----- ----- ------- ----- -----
Annualised rent roll in Germany increased by 8.3% from EUR113.7
million to EUR123.1 million with net acquisitions and organic
growth contributing EUR2.4 million and EUR8.2 million respectively.
BizSpace's annualised rent roll increased 7.4%(1) from EUR51.3(1)
million to EUR55.1(1) million in the period, with the impact of
organic growth of EUR4.4 million being reduced by disposals of
EUR0.6 million. This is shown in more detail in the following
table:
Germany UK (1) Group
EURm EURm EURm
----------------------------- ------- ------ -----
Opening annualised rent roll 113.7 51.3 165.0
Acquisitions 2.4 - 2.4
Disposals (1.2) (0.6) (1.8)
Move-ins/outs 1.9 (0.1) 1.8
Uplifts 6.3 4.5 10.8
----------------------------- ------- ------ -----
Closing annualised rent roll 123.1 55.1 178.2
----------------------------- ------- ------ -----
Whilst the rental growth in the period was impressive, the fact
that this was achieved without reducing vacancy levels means that
the opportunity that remains within this vacancy for further
organic growth over the next few years has been preserved. The key
to unlocking this in the most effective way is through the
continuation of Sirius' capex investment programmes combined with a
wide range of other intensive asset management initiatives.
Additionally, whilst inflation levels continue to be high, Sirius
is able to boost its organic growth numbers because of its ability
to capture inflationary increases within its contracted rents as
well as when tenants renew and new tenants are coming in.
Portfolio valuation - Group
The portfolio of owned assets was independently valued at
EUR2,103.2 million by Cushman & Wakefield LLP at 31 March 2023
(31 March 2022: EUR2,079.0 million), which converts to a book value
of EUR2,123.0 million after the adjustments in relation to lease
incentives and inclusion of leased investment property. A breakdown
of the movement in owned and leased investment property, excluding
assets held for sale, is detailed in the table below.
German German
investment investment UK investment UK investment Investment
property property property property property
- owned - leased - owned - leased - total
EURm EURm EURm EURm EURm
--------------------------------- ----------- ----------- ------------- ------------- ----------
Investment properties at
book value as at 31 March
2022* 1,623.2 12.1 451.8 13.0 2,100.1
Acquisitions arising from
business combinations - - - - -
Additions relating to owned
investment properties 44.6 - - - 44.6
Additions relating to leased
investment properties - - - 1.4 1.4
Capex investment and capitalised
broker fees 24.4 - 5.5 - 29.9
Reclassified as investment
property held for sale (8.8) - - - (8.8)
Disposal - - (17.1) - (17.1)
Deficit on revaluation above
capex investment and broker
fees (2.0) - (5.7) - (7.7)
Deficit on revaluation relating
to leased investment properties - (1.3) - (0.2) (1.5)
Adjustment in respect of
lease incentives (0.6) - (0.6)
Currency effects - - (16.8) (0.5) (17.3)
--------------------------------- ----------- ----------- ------------- ------------- ----------
Investment properties at
book value as at 31 March
2023* 1,680.8 10.8 417.7 13.7 2,123.0
--------------------------------- ----------- ----------- ------------- ------------- ----------
* Excluding assets held for sale.
The increase in value of the German portfolio of EUR57.6 million
was made up of EUR44.6 million of asset acquisitions, less EUR8.8
million of disposals, plus a EUR22.4 million valuation increase on
the existing portfolio and finally a EUR0.6 million negative
adjustment in respect of lease incentives. The EUR22.4 million
valuation increase was lower than the EUR24.4 million of capex
spent on that portfolio; hence, the net of these resulted in a
EUR2.0 million deficit being booked through the Company's
profit.
In the UK, the value of the BizSpace portfolio reduced by
EUR34.1 million due to EUR17.1 million of disposals partly offset
by EUR1.4 million of additions*, a valuation decrease of EUR0.2
million on the existing portfolio and a EUR17.3 million foreign
currency reduction due to the weakening of GBP against the EUR for
the year. In addition to the EUR0.2 million valuation reduction,
capex of EUR5.5 million was invested into the UK portfolio
resulting in a EUR5.7 million deficit being reported through the
Company's profit.
* Sirius extended a lease on an asset in the UK resulting in an
increase in the carrying value of EUR1.4 million.
Portfolio valuation - Germany
The book value of the existing German portfolio that was owned
for the full period increased by EUR21.7 million or 1.3% from
EUR1,623.2 million to EUR1,644.8 million. This was driven by an
increase in annualised rent roll of EUR8.2 million in the year
which more than compensated for a gross yield expansion of
approximately 40 bps. The assets that were acquired during the year
end were revalued at EUR44.4 million which is EUR0.2 million below
the total acquisition costs paid and 7.8% above the net purchase
prices paid for these properties, indicating that these assets were
purchased well.
The German portfolio at 31 March 2023 comprises 70 assets with a
book value of EUR1,689.6 million generating EUR125.5 million of
rental income and EUR109.8 million of net operating income based on
an occupancy of 83.4%. This represents an average gross yield of
7.3% (31 March 2022: 6.9%), which translates to a net yield of 6.5%
(31 March 2022: 6.2%) and an EPRA net yield (including estimated
purchaser costs) of 6.2% (31 March 2022: 5.9%).
Whilst yields have expanded within the German portfolio
valuation by around 40 bps in the period to 7.3%, this still
appears to be conservative when compared to transactions that have
completed over the last year in the industrial, logistics and
office sectors in Germany. The average capital value per sqm of the
portfolio of EUR912 (31 March 2022: EUR893) also remains below
replacement cost and, when considered with the level of vacancy
that remains within the portfolio, illustrates the excellent
opportunity for further growth, particularly from upgrading and
letting up the sub-optimal vacant space through the Company's capex
investment programmes.
The acquisitions made over the last couple of years have
replenished a lot of the vacancy that was transformed and let up
through Sirius' capex investment programmes. As a result, at 31
March 2023, 65% of the German portfolio are considered value-add
assets which, with average occupancy of 79.3% and valued at a gross
yield of 7.6%, provide significant opportunity for further earnings
and value growth. The mature assets which make up about one-third
of the German portfolio have reached an occupancy level of 94.4%
and, at a gross yield of 6.7%, are valued at a yield that is 90 bps
lower than the value-add assets. As the transformation of the
value-add assets continues, the yield gap between the mature and
value-add assets is expected to reduce. The full details of the
capex investment programmes are provided in the Asset management
review - Germany section of this report. The specifics of the
value-add and mature portfolios are detailed in the table
below:
Capital Gross
Annualised value yield Net yield Vacant
rent roll Book value NOI EURm/sqm * * space Rate psqm Occupancy
EURm EURm EURm * % % sqm * EUR * % *
-------------- ---------- ---------- ----- --------- ------ --------- ------- --------- ---------
Value-add
assets** 83.0 1,091.3 72.7 812 7.6% 6.7% 270,454 6.68 79.3%
Mature assets 40.1 598.3 38.6 1,174 6.7% 6.4% 27,488 7.26 94.4%
Other - - (1.5) - - - - - -
-------------- ---------- ---------- ----- --------- ------ --------- ------- --------- ---------
Total 123.1 1,689.6 109.8 912 7.3% 6.5% 297,942 6.86 83.4%
-------------- ---------- ---------- ----- --------- ------ --------- ------- --------- ---------
* Expressed as averages.
** Including assets held for sale.
The reconciliation of book value to the independent Cushman
& Wakefield LLP valuation excluding assets held for sale is as
follows:
31 March 31 March
2023 2022
EURm EURm
------------------------------------------ -------- --------
Investment properties at market value* 1,685.5 1,627.3
Adjustment in respect of lease incentives (4.7) (4.1)
------------------------------------------ -------- --------
Book value of investment properties* 1,680.8 1,623.2
------------------------------------------ -------- --------
* Excluding assets held for sale.
Portfolio valuation - UK
At 31 March 2023, the value of the UK portfolio was GBP367.2
million (EUR417.7 million) which was broadly flat compared to the
GBP367.4 million (EUR434.3 million) valuation of this portfolio at
31 March 2022. The benefits of the GBP3.8 million (8.7%) increase
in annualised rent roll for this portfolio in the period were more
than offset by yield expansion of around 100 bps to 9.3% (31 March
2022: 8.3%). Similar to the German portfolio, the EPRA net yield
(including estimated purchaser costs) of 8.7% (31 March 2022: 7.6%)
looks conservative compared to transactions seen in the market. On
a euro basis the reduction in value was EUR16.6 million which was
higher than the GBP0.2 million stated above due to the weakening of
GBP against EUR.
The total portfolio valuation decreased by GBP15.0 million
across the period to GBP367.2 million (31 March 2022: GBP382.2
million), being the combination of the GBP0.2 million valuation
reduction as described above and the disposal of Camberwell and
Ipswich during the period.
The average capital value per sqm of the portfolio of GBP88 per
sq ft (EUR1,072 per sqm) (31 March 2022: GBP88 per sq ft (EUR1,105
per sqm)) also remains below replacement cost and further supports
the sentiment that there remains value-add potential within the
portfolio.
Capital
Annualised value Gross Vacant
rent roll Book value NOI GBP/sq yield Net yield space Rate psqft Occupancy
GBPm GBPm GBPm ft % % sq ft GBP %
------------- ---------- ---------- ----- ------- ------ --------- ------- ---------- ---------
UK portfolio 48.5 367.2 34.0 88 13.2% 9.3% 567,899 13.39 86.5%
------------- ---------- ---------- ----- ------- ------ --------- ------- ---------- ---------
The UK does not have material lease incentives adjusting the
investment property values.
Net asset value
The valuation movements mentioned above along with a dividend
pay-out ratio of 65% of FFO resulted in a slight increase in net
asset value per share to 102.46c at 31 March 2023, an uplift of
0.4% from 102.04c as at 31 March 2022. Similarly, the adjusted net
asset value per share increased to 109.21c at 31 March 2023, an
uplift of 0.6% from 108.51c as at 31 March 2022. In addition, the
Company paid out 5.07c per share of dividends during the financial
year which contributed to a total shareholder accounting return
(adjusted NAV growth plus dividends paid) of 5.3% (31 March 2022:
20.0%). The movement in NAV per share is explained in the following
table:
Cents per
share
-------------------------------------------- ---------
NAV per share as at 31 March 2022 102.04
Recurring profit after tax 7.96
Equity raise -
Deficit on revaluation (net of capex) (0.71)
Deferred tax charge (0.37)
Scrip and cash dividend paid (5.27)
Adjusting items(1) (1.19)
-------------------------------------------- ---------
NAV per share at 31 March 2023 102.46
-------------------------------------------- ---------
Deferred tax and derivatives 6.75
-------------------------------------------- ---------
Adjusted NAV per share at 31 March 2023 (2) 109.21
-------------------------------------------- ---------
EPRA adjustments(3) (1.10)
-------------------------------------------- ---------
EPRA NTA per share at 31 March 2023 (2) 108.11
-------------------------------------------- ---------
(1) Adjusting items includes non-recurring items including
restructuring costs, share of profit in associates, gains and
losses on investments, and foreign currency effects.
(2) See Annex of 2023 Annual accounts for further details.
(3) Adjusted for the potential impact of shares issued in
relation to the Company's long-term incentive programmes,
intangible assets, provisions for deferred tax and derivative
financial instruments.
The EPRA NTA per share, which, like adjusted NAV per share,
excludes the provisions for deferred tax and fair value of
derivative financial instruments but also includes the potential
impact of shares issued in relation to the Company's long-term
incentive programmes and excludes intangible assets, was 108.11c,
an increase of 0.8% from 107.28c as at 31 March 2022.
Financing
In May 2023 the Company refinanced its EUR57.3 million Deutsche
Pfandbriefbank (PBB) loan facility, seven months in advance of it
falling due on 31 December 2023. The new facility amounting to
EUR58.3 million has a term of seven years at a fixed interest rate
of 4.25%. In addition to this early refinancing, in August 2022 the
Company secured a refinancing with Berlin Hyp AG, one year in
advance, of its EUR170 million facility due in October 2023,
agreeing a new 7-year EUR170 million facility commencing on 1
November 2023 with a fixed interest rate of 4.26%. When these
facilities commence, the weighted average cost of debt will
increase from 1.4% to 2.1% and the weighted term of debt will
increase from 3.3 years to 5.0 years. Whilst Berlin Hyp and PBB
facilities are classified as a current liability due to their
accounting treatment, these do not have a negative impact on
working capital as these have been financed as new loans.
Of the EUR975.1 million of total debt, the Company has EUR49.3
million of debt coming due in the next three years which is made up
of three tranches of the HSBC Schuldschein totalling EUR35 million
and EUR14.3 million Saarbrücken Sparkasse. Of this debt, EUR20
million of the HSBC Schuldschein is due in July 2023, which the
Company is in negotiations with the current lender to refinance
ahead of expiry but has the ability to repay if required.
During December 2022 and January 2023 of the financial year, the
Company repaid two tranches of its HSBC Schuldschein amounting to
EUR5 million and EUR10 million respectively. The debt structure of
the Company remains such that 75% of its debt is unsecured (31
March 2022: 75%) allowing the Company to maintain flexibility over
its EUR1.6 billion of unencumbered assets.
Net LTV was 41.6% (31 March 2022: 41.6%) whilst interest cover
at EBITDA level was 8.6x as at 31 March 2023 (31 March 2022: 7.3x).
All covenants were complied with in full during the period. A
summary of the movement in the Group's debt is set out below:
Movement in debt
EURm
------------------------------- ------
Total debt as at 31 March 2022 995.6
Repayment of credit facility (15.0)
Scheduled amortisation (5.5)
------------------------------- ------
Total debt as at 31 March 2023 975.1
------------------------------- ------
Dividend
The Board has authorised a dividend in respect of the second
half of the financial year ended 31 March 2023 of 2.98c per share,
representing a pay-out of 65% of FFO and an increase of 25.7% on
the equivalent dividend last year which was also based on 65% of
FFO. The total dividend in respect of the financial year is 5.68c,
an increase of 28.8% on the 4.41c total dividend paid in respect of
the financial year ended 31 March 2022.
The table below shows the dividends paid and pay-out ratios over
the last five years, demonstrating the excellent progression the
Company has made in the period as well as the ability of the Board
to increase the dividend pay-out ratio whilst the proceeds of asset
disposals are invested.
Second
First half half Blended
dividend dividend Total dividend pay-out
per share per share per share ratio
cents cents cents % of FFO
----------------------- ---------- ---------- -------------- ---------
Year ended March 2019 1.63 1.73 3.36 70%
Year ended March 2020* 1.77 1.80 3.57 66%
Year ended March 2021 1.82 1.98 3.80 65%
Year ended March 2022 2.04 2.37 4.41 65%
Year ended March 2023 2.70 2.98 5.68 65%
----------------------- ---------- ---------- -------------- ---------
* First half 67%, second half 65% of FFO.
Details of the dividend distribution and announcement are
detailed in note 30 of the Annual Report and Accounts.
Summary
Despite continuing challenging market conditions, the year to 31
March 2023 demonstrated the resilience of the Sirius platform as it
was able to achieve its goal of EUR100 million of FFO. Organic
growth was mainly achieved through capturing rate increases via the
Company's price driven strategy as well as continuing improvements
to the service charge cost recovery. Having a full year impact of
the deals done in the prior year obviously helped but plenty
remains in the tank as far as further FFO and dividend growth is
concerned over the next few years.
In addition, the Company has significantly improved the strength
of its balance sheet over the last few years which will allow it to
focus on this growth and not have to worry about yield expansion,
debt refinancing and cash flow like many of the other property
companies operating throughout the world. Regardless of what
transpires in the markets that Sirius operates in, from increasing
interest rates and high inflation, to further geopolitical issues,
supply chain problems and volatile energy prices and investment
markets, Sirius is in an excellent position to navigate through and
continue to grow. Should substantial acquisition opportunities
arise then the Company is also well positioned to take
advantage.
The Company's strong financial profile, along with its proven
internal operating platform, means the Company is fully capable of
adapting to changing market conditions. With acquisition firepower
available, further vacancy to develop and reversion potential to
capture, as well as a defensively positioned portfolio, the Company
is well set to meet the challenges ahead and looks forward to
continuing to deliver attractive and sustainable returns for
shareholders in the future.
Alistair Marks
Chief Financial Officer
2 June 2023
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors confirm that, to the best of their knowledge the
preliminary consolidated financial statements have been prepared in
accordance with international financial reporting standards, and
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group and that this announcement
includes a fair summary of the development and performance of the
business and the position of the Group. After making enquiries, the
directors considered it appropriate to adopt the going concern
basis in preparing the financial statements. The names and
functions of the Company's directors are listed on the Company's
website.
Daniel Kitchen
Chairman
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Group are
included on pages 74 to 81 of the Group's Annual Report and
Accounts 2023 available on the website at:
www.sirius-real-estate.com
Consolidated INCOME statement
for the year ended 31 March 2023
Year ended Year ended
31 March 31 March
2023 2022
Notes EURm EURm
------------------------------------------------ ----- ---------- ----------
Revenue 6 270.1 210.2
Direct costs 7 (116.7) (87.7)
------------------------------------------------ ----- ---------- ----------
Net operating income 153.4 122.5
(Loss)/gain on revaluation of investment
properties 14 (9.8) 140.9
Gain/(loss) on disposal of properties 4.7 (0.6)
Recoveries from prior disposals of subsidiaries - 0.1
Movement in expected credit loss provision(1) 7 (1.0) (2.3)
Administrative expenses(1) 7 (48.3) (38.4)
Goodwill impairment 17 - (40.9)
Share of profit of associates 20 2.6 6.9
------------------------------------------------ ----- ---------- ----------
Operating profit 101.6 188.2
------------------------------------------------ ----- ---------- ----------
Finance income 10 2.8 3.0
Finance expense 10 (18.3) (23.3)
Change in fair value of derivative financial
instruments 10 0.9 1.0
------------------------------------------------ ----- ---------- ----------
Net finance costs (14.6) (19.3)
------------------------------------------------ ----- ---------- ----------
Profit before tax 87.0 168.9
Taxation 11 (7.3) (20.9)
------------------------------------------------ ----- ---------- ----------
Profit for the year after tax 79.7 148.0
------------------------------------------------ ----- ---------- ----------
Profit attributable to:
Owners of the Company 79.6 147.9
Non-controlling interest 0.1 0.1
------------------------------------------------ ----- ---------- ----------
79.7 148.0
------------------------------------------------ ----- ---------- ----------
Earnings per share
Basic earnings per share 12 6.82c 13.48c
Diluted earnings per share 12 6.73c 13.29c
------------------------------------------------ ----- ---------- ----------
(1) To conform to the current year presentation, the movement in
expected credit loss provision has been shown as a separate line
and this is a reallocation from administrative expenses for the
year ended 31 March 2022.
All operations of the Group have been classified as
continuing.
Consolidated statement of comprehensive income
for the year ended 31 March 2023
Year
ended Year ended
31 March 31 March
2023 2022
Notes EURm EURm
-------------------------------------------------- ----- --------- ----------
Profit for the year after tax 79.7 148.0
-------------------------------------------------- ----- --------- ----------
Other comprehensive loss that may be reclassified
to profit or loss in subsequent periods
Foreign currency translation reserve 28 (17.2) (1.7)
-------------------------------------------------- ----- --------- ----------
Other comprehensive loss after tax that may
be reclassified to profit or loss in subsequent
periods (17.2) (1.7)
-------------------------------------------------- ----- --------- ----------
Other comprehensive loss for the year after
tax (17.2) (1.7)
-------------------------------------------------- ----- --------- ----------
Total comprehensive income for the year after
tax 62.5 146.3
-------------------------------------------------- ----- --------- ----------
Total comprehensive income attributable to:
Owners of the Company 62.4 146.2
Non-controlling interest 0.1 0.1
-------------------------------------------------- ----- --------- ----------
62.5 146.3
-------------------------------------------------- ----- --------- ----------
Consolidated statement of financial position
as at 31 March 2023
31 March 31 March
2023 2022
Notes EURm EURm
---------------------------------------- ----- --------- ---------
Non-current assets
Investment properties 14 2,123.0 2,100.0
Plant and equipment 16 7.2 5.5
Intangible assets 17 4.1 4.3
Right of use assets 18 14.4 15.0
Other non-current financial assets 19 48.4 48.3
Investment in associates 20 26.7 24.1
---------------------------------------- ----- --------- ---------
Total non-current assets 2,223.8 2,197.2
---------------------------------------- ----- --------- ---------
Current assets
Trade and other receivables 21 30.5 24.6
Derivative financial instruments 1.3 0.3
Cash and cash equivalents 22 124.3 151.0
---------------------------------------- ----- --------- ---------
Total current assets 156.1 175.9
---------------------------------------- ----- --------- ---------
Assets held for sale 15 8.8 13.8
---------------------------------------- ----- --------- ---------
Total assets 2,388.7 2,386.9
---------------------------------------- ----- --------- ---------
Current liabilities
Trade and other payables 23 (101.5) (89.3)
Interest-bearing loans and borrowings 24 (243.7) (19.6)
Lease liabilities 18 (2.2) (1.1)
Current tax liabilities 11 (5.4) (10.4)
---------------------------------------- ----- --------- ---------
Total current liabilities (352.8) (120.4)
---------------------------------------- ----- --------- ---------
Non-current liabilities
Interest-bearing loans and borrowings 24 (720.7) (961.9)
Lease liabilities 18 (37.4) (37.6)
Deferred tax liabilities 11 (80.2) (75.9)
---------------------------------------- ----- --------- ---------
Total non-current liabilities (838.3) (1,075.4)
---------------------------------------- ----- --------- ---------
Total liabilities (1,191.1) (1,195.8)
---------------------------------------- ----- --------- ---------
Net assets 1,197.6 1,191.1
---------------------------------------- ----- --------- ---------
Equity
Issued share capital 27 - -
Other distributable reserve 28 516.4 570.4
Own shares held 27 (8.3) (6.3)
Foreign currency translation reserve 28 (18.9) (1.7)
Retained earnings 707.9 628.3
---------------------------------------- ----- --------- ---------
Total equity attributable to the owners
of the Company 1,197.1 1,190.7
---------------------------------------- ----- --------- ---------
Non-controlling interest 0.5 0.4
---------------------------------------- ----- --------- ---------
Total equity 1,197.6 1,191.1
---------------------------------------- ----- --------- ---------
The financial statements on pages 149 to 292 were approved by
the Board of Directors on 2 June 2023 and were signed on its behalf
by:
Daniel Kitchen
Chairman
Company number: 46442
Consolidated statement of changes in equity
for the year ended 31 March 2023
Total
equity
attributable
Foreign to the
Issued Other Own currency owners Non-
share distributable shares translation Retained of controlling Total
capital reserve held reserve earnings the Company interest equity
Notes EURm EURm EURm EURm EURm EURm EURm EURm
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
As at 31 March
2021 - 449.1 (3.0) - 480.4 926.5 0.3 926.8
Profit for the
year - - - - 147.9 147.9 0.1 148.0
Other
comprehensive
income for
the
year - - - (1.7) - (1.7) - (1.7)
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
Total
comprehensive
income for
the
year - - - (1.7) 147.9 146.2 0.1 146.3
Shares issued 159.9 - - - - 159.9 - 159.9
Transaction
cost
relating to
share
issues (6.2) - - - - (6.2) - (6.2)
Dividends paid 30 13.7 (44.5) - - - (30.8) - (30.8)
Transfer of
share
capital 30 (167.4) 167.4 - - - - - -
Share-based
payment
transactions 9 - 1.9 - - - 1.9 - 1.9
Value of
shares
withheld to
settle
employee tax
obligations 9 - (3.5) - - - (3.5) - (3.5)
Own shares
purchased 27 - - (5.5) - - (5.5) - (5.5)
Own shares
allocated 27 - - 2.2 - - 2.2 - 2.2
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
As at 31 March
2022 - 570.4 (6.3) (1.7) 628.3 1,190.7 0.4 1,191.1
Profit for the
year - - - - 79.6 79.6 0.1 79.7
Other
comprehensive
income for
the
year - - - (17.2) - (17.2) - (17.2)
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
Total
comprehensive
income for
the
year - - - (17.2) 79.6 62.4 0.1 62.5
Dividends paid 30 1.4 (59.2) - - - (57.8) - (57.8)
Transfer of
share
capital 30 (1.4) 1.4 - - - - - -
Share-based
payment
transactions 9 - 5.5 - - - 5.5 - 5.5
Value of
shares
withheld to
settle
employee tax
obligations 9 - (1.7) - - - (1.7) - (1.7)
Own shares
purchased 27 - - (2.3) - - (2.3) - (2.3)
Own shares
allocated 27 - - 0.3 .- - 0.3 - 0.3
As at 31 March
2023 - 516.4 (8.3) (18.9) 707.9 1,197.1 0.5 1,197.6
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
Consolidated statement of cash flows
for the year ended 31 March 2023
Year ended Year ended
31 March 31 March
2023 2022
Notes EURm EURm
-------------------------------------------------- ----- ---------- ----------
Operating activities
Profit for the year before tax 87.0 168.9
(Gain)/loss on disposal of properties (4.7) 0.6
Recoveries from prior disposals of subsidiaries - (0.1)
Net exchange differences (0.2) (2.0)
Share-based payments 9 5.5 4.2
Loss/(gain) on revaluation of investment
properties 14 9.8 (140.9)
Change in fair value of derivative financial
instruments 10 (0.9) (1.0)
Depreciation of property, plant and equipment 16 2.1 1.2
Amortisation of intangible assets 17 1.3 1.2
Depreciation of right of use assets 18 2.1 0.8
Goodwill impairment 17 - 40.9
Share of profit of associates 20 (2.6) (6.9)
Finance income 10 (2.8) (3.0)
Finance expense 10 18.3 23.2
Increase in trade and other receivables (5.9) (5.2)
Increase in trade and other payables 12.4 3.5
Taxation paid (8.0) (3.7)
-------------------------------------------------- ----- ---------- ----------
Cash flows from operating activities 113.4 81.8
-------------------------------------------------- ----- ---------- ----------
Investing activities
Purchase of investment properties (42.8) (162.8)
Prepayments relating to new acquisitions - (1.9)
Proceeds from loss on control of subsidiaries
(net of cash disposed) - 0.1
Capital expenditure on investment properties (28.4) (23.8)
Purchase of plant and equipment and intangible
assets (5.3) (3.5)
Acquisition of a subsidiary (net of cash
acquired) - (254.7)
Proceeds on disposal of properties (including
held for sale) 32.0 15.3
Increase in loans receivable due from associates (0.1) (1.1)
Interest received 2.8 3.0
-------------------------------------------------- ----- ---------- ----------
Cash flows used in investing activities (41.8) (429.5)
-------------------------------------------------- ----- ---------- ----------
Financing activities
Proceeds from issue of share capital 27 - 159.9
Transaction costs on issue of shares 27 - (6.2)
Shares purchased (2.3) (5.5)
Payment relating to exercise of share options 9 (1.7) (3.5)
Dividends paid to owners of the Company 30 (57.8) (30.8)
Dividends paid to non-controlling interest - -
Proceeds from loans - 750.0
Repayment of loans (20.4) (399.4)
Payment of principal portion of lease liabilities (1.2) (5.9)
Exit fees/prepayment of financing penalties - (5.3)
Capitalised loan issue cost - (14.4)
Finance charges paid (15.2) (7.1)
-------------------------------------------------- ----- ---------- ----------
Cash flows from financing activities (98.6) 431.8
-------------------------------------------------- ----- ---------- ----------
(Decrease)/increase in cash and cash equivalents (27.0) 84.0
Net exchange difference 0.3 1.3
Cash and cash equivalents as at the beginning
of the year 151.0 65.7
-------------------------------------------------- ----- ---------- ----------
Cash and cash equivalents as at the year
end 22 124.3 151.0
-------------------------------------------------- ----- ---------- ----------
Notes to the financial statements
for the year ended 31 March 2023
1. General information
Sirius Real Estate Limited (the "Company") is a company
incorporated in Guernsey and resident in the United Kingdom for tax
purposes, whose shares are publicly traded on the Main Market of
the London Stock Exchange ("LSE") (primary listing) and the Main
Board of the Johannesburg Stock Exchange ("JSE") (primary
listing).
The consolidated financial information of the Company comprises
that of the Company and its subsidiaries (together referred to as
the "Group" or "Sirius") for the year ended 31 March 2023.
The principal activity of the Group is the investment in, and
development of, commercial and industrial property to provide
conventional and flexible workspace in Germany and the United
Kingdom ("UK").
2. Significant accounting policies
(a) Basis of preparation
The consolidated financial statements have been prepared on a
historical cost basis, except for investment properties, investment
properties held for sale and derivative financial instruments,
which have been measured at fair value. The consolidated financial
information has been presented in euros and all values are rounded
to the nearest thousand (EUR000) in prior years. The consolidated
financial information in the current year is presented in euros and
all values are rounded to the nearest hundred thousand shown in
millions (EURm), except where otherwise indicated.
The Company has prepared its annual consolidated financial
statements in accordance with International Financial Reporting
Standards as issued by the IASB ("IFRS") as a result of the primary
listing on the JSE. See also note 2(c) for statement of
compliance.
As at 31 March 2023 the Group's consolidated financial
statements reflect consistent accounting policies and methods of
computation as used in the previous financial year, except for the
changes in the application of accounting policies as described in
note 2(b), in accordance with IFRS.
(b) Changes in accounting policies
There were several new and amendments to standards and
interpretations which are applicable for the first time for the
Group from 1 April 2022. None of them have had a significant impact
on the Group's income statement or balance sheet.
IFRIC: Demand Deposits with restrictions on use arising from a
contract with a Third Party (IAS 7 Statement of Cash Flows).
The agenda decision considered accounting for deposits subject
to contractual restrictions on use. The Committee clarified the
position such that where an entity has a contractual obligation
with a third party to keep a specified amount of cash in a separate
demand deposit for specified purposes, but accessibility of cash
amounts in these deposits are assured, the entity includes the
demand deposit as a component of "cash and cash equivalents" in its
statement of financial position and statement of cash flows. The
Committee concluded that the contractual restrictions do not change
the nature of the deposit if the entity can access those amounts on
demand. Therefore, the Group has reviewed the deposits in respect
of accessibility and concluded no adjustment is required. Deposits
that are determined to be restricted only as to their use are
separately disclosed (see note 22).
In respect of IFRS 16, deferred tax had not previously been
recognised due to the application of the initial recognition
exemption. On 7 May 2021, the IASB issued "Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12)", which amends the application of the
initial recognition exemption for transactions giving rise to
offsetting deferred tax assets and deferred tax liabilities. A
deferred tax liability has been recognised on the IFRS 16 right of
use asset and a deferred tax asset in respect of the IFRS 16 lease
liability resulting in a net deferred tax liability recognised as
at 31 March 2023 and 31 March 2022. The amendments to the initial
recognition exemption under IAS 12 are effective for accounting
periods beginning on or after 1 January 2023 and have been adopted
early. The early adoption of this did not have a material impact on
the annual financial statements of the Group.
A number of new other standards and amendments to standards have
been issued but are not yet effective for the Group and have not
been early adopted. The application of these new standards and
amendments are not expected to have a material impact on the
Group's financial statements.
(c) Statement of compliance
The consolidated financial statements have been prepared in
accordance with the Disclosure and Transparency Rules of the United
Kingdom Financial Conduct Authority, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, Financial
Reporting Pronouncements as issued by the Financial Reporting
Standards Council, the listings requirements of the JSE Limited,
IFRS, IAS 34 Interim Reporting and The Companies (Guernsey) Law,
2008. The consolidated financial statements have been prepared on
the same basis as the accounting policies set out in the Group's
annual financial statements for the year ended 31 March 2022,
except for the changes in accounting policies as shown in note
2(b). All forward-looking information is the responsibility of the
Board of Directors and has not been reviewed or reported on by the
Group's auditors.
(d) Going concern
The Group has prepared its going concern assessment for the
period to 31 October 2024 (the "going concern period"), a period
greater than twelve months and chosen to align with the expected
timing of the approval of the Company's subsidiary entities
financial statements where a letter of support is expected to be
required from the Company. The Directors also evaluated potential
events and conditions beyond the going concern period that may cast
significant doubt on the Group's ability to continue as a going
concern, with no significant transactions or events of material
uncertainty identified.
The Group's going concern assessment is based on a forecast of
the Group's future cash flows. This considers Management's base
case scenario and a severe but plausible downside scenario where
sensitivities are applied to model the outcome on the occurrence of
downside assumptions explained below. It considers the Group's
principal risks and uncertainties and is dependent on a number of
factors including financial performance, continued access to
lending facilities (see note 24) and the ability to continue to
operate the Group's secured and unsecured debt structure within its
financial covenants. Within the going concern period, three of the
Group's facilities mature, with the EUR20.0 million tranche of the
HSBC Schuldschein loan falling due in July 2023, the Berlin Hyp
facility of EUR170.0 million having already been refinanced in
August 2022 one year ahead of its maturity in October 2023 (see
note 24) and the Deutsche Pfandbriefbank loan of EUR57.3 million,
which falls due in December 2023 having been refinanced on 26 May
2023 through a new EUR58.3 million facility extending to 31
December 2030 (see note 35). No further debt of the Group matures
until 2025.
The severe but plausible scenario models a potential downturn in
the Group's performance, including the potential impact of downside
macro-factors such as geopolitical instability, future energy
shortages, further cost increases due to inflation, pressures from
increasing interest rates and outward yield movements on the
Group's financial position and future prospects. The cash flow
projections incorporate assumptions on future trading performance
and potential valuation movements in order to estimate the level of
headroom on facilities and covenants for loan to value, debt
service cover, EPRA net asset value, unencumbered assets ratios,
fixed charge ratios and occupancy ratios set out within the
relevant finance agreements.
The impact of the macro-factors above have placed further
pressure on the costs of the business, however this did not result
in any deterioration in the Group's income streams in FY23 and
asset values remained relatively stable. However, the Directors
have been mindful of the challenging macro-factors present in the
market from 31 March 2022 and have reflected this in an increase to
the severity of the falls in valuations assessed in the severe but
plausible downside scenario in the going concern period.
The base case and severe but plausible downside scenarios
include the following assumptions applied to both the German and UK
portfolios:
Base case:
>> 5.5% growth in rent roll at 31 March 2023, principally
from contractual increases in rents and organic growth through
lease renewals;
>> increasing cost levels in line with forecast inflation
of 6% to March 2024 and 2% beyond;
>> continuation of forecast capex investment;
>> continuation of forecast dividend payments in line with
historic dividend payouts;
>> payment of contractual loan interest and loan
amortisation amounts, repayment of EUR20.0 million of the
Schuldschein facility in July 2023 and utilisation of the new
Berlin Hyp and Deutsche Pfandbriefbank facilities on the maturity
of existing facilities in October and December 2023;
>> no acquisitions or sale of assets within the
period.
Severe but plausible downside scenario:
>> reduction in occupancy and rental income of 10% per
annum from the base case assumptions;
>> reduction in service charge recovery of 10% per annum
from the base case assumptions;
>> reduction in property valuations of 10% per annum;
and
>> payment of contractual loan interest and loan
amortisation amounts, repayment of EUR20.0 million of the
Schuldschein facility in July and utilisation of the new Berlin Hyp
and Deutsche Pfandbriefbank facilities on the maturity of existing
facilities in October and December 2023
The Directors are of the view that there is a remote probability
of a more severe scenario arising than the above severe but
plausible downside scenario based upon the Group's track record of
performance in challenging scenarios, most recently through the
high inflationary environment in both Germany and the UK, the
Covid-19 pandemic and post-pandemic period. In addition, the Group
has already secured the refinancing of the Deutsche Pfandbriefbank
and Berlin Hyp AG facilities in advance of their maturity dates in
the going concern period.
In the severe but plausible downside scenario, the Group is
expected to comply with its loan covenants, with no covenant
breaches forecasted.
The Directors are of the view that there is a high probability
of securing the refinancing or an alternative source of secured or
unsecured funding to replace the EUR20.0 million Schuldschein
facility. This judgement has been informed by the Group's financial
forecasts and the Group's track-record in previously refinancing
maturing debt. The Company is in discussions with its current
lender to secure re-financing as it comes due. Should the debt
facility falling due not be refinanced or extended, the group has
available cash to repay the facility and could call upon the use of
mitigating factors referred to below. The mitigating factors are
within the control of the Directors and there is sufficient time
for such mitigating factors to be implemented, if required.
In the severe but plausible downside scenario, the Company
assumes full repayment of the maturing loan obligations as they
fall due, amounting to EUR20.0 million in the going concern period.
The Company forecasts indicate sufficient free cash would be
available to repay these funds in full and maintain sufficient
liquidity to not require the additional mitigating actions as
outlined below available to it, should the severe but plausible
downside scenario come to pass.
The Group also performed a reverse stress test over the impact
of a fall in its property valuations during the going concern
period. This showed that the Group could withstand a fall in
valuations of 21%, (a level not previously seen by the Group)
before there was a loan to value covenant breach. This is therefore
considered to be a remote possibility during the going concern
period. In each of the scenarios considered for going concern, the
Group forecasts having sufficient free cash available and if
required, could utilise available mitigating actions which would be
available to the Group in the going concern review period, which
include restricting dividends, reducing capital expenditure or the
disposal of unencumbered assets that have a book value of EUR1.6
billion as at 31 March 2023. The restriction of dividends or
reducing capital expenditure are within the control of the
Directors and there is sufficient time to implement these
restrictions, if required. The Directors have not identified any
material uncertainties which may cast significant doubt on the
Group's ability to continue as a going concern for the duration of
the going concern period.
After due consideration of the going concern assessment for the
period to 31 October 2024, the Board believes it is appropriate to
adopt the going concern basis in preparing its financial
statements.
(e) Basis of consolidation
The consolidated financial information comprises the financial
information of the Group as at 31 March 2023. The financial
information of the subsidiaries is prepared for the same reporting
period as the Company, using consistent accounting policies.
All intra-group balances and transactions and any unrealised
income and expenses arising from intra-group transactions are
eliminated in preparing the consolidated financial statements.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases.
Non-controlling interests represent the portion of profit or
loss and net assets not held by the Group and are presented
separately in the consolidated income statement and the
consolidated statement of comprehensive income and within equity in
the consolidated statement of financial position, separately from
the Company's shareholders' equity.
(f) Acquisitions
Where a property is acquired through the acquisition of
corporate interests, management considers the substance of the
assets and activities of the acquired entity in determining whether
the acquisition represents the acquisition of a business.
The Group accounts for an acquisition as a business combination
where an integrated set of activities is acquired in addition to
the property (see policy in note 2(aa)). More specifically,
consideration is made of the extent to which substantive processes
are acquired and, in particular, the extent of services provided by
the subsidiary. IFRS 3 "Business Combinations" sets out an optional
concentration test designed to simplify the evaluation of whether
an acquired set of activities and assets is not a business. An
acquired set of activities and assets is not a business if
substantially all of the fair value of the gross assets acquired is
concentrated in a single identifiable asset or group of similar
identifiable assets.
Where such acquisitions are not deemed to be an acquisition of a
business, they are not treated as business combinations. Instead,
they are treated as asset acquisitions, with the cost to acquire
the corporate entity being allocated between the identifiable
assets and liabilities of the entity based on their relative fair
values on the acquisition date. Accordingly, no goodwill
arises.
(g) Foreign currency translation
The consolidated financial information is presented in euros,
which is the functional and presentational currency of the parent
company. For each entity, the Group determines the functional
currency and items included in the financial statements of each
entity are measured using the functional currency.
Transactions in foreign currencies are initially recorded in the
functional currency at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated into the functional currency at the
exchange rate ruling at the statement of financial position date.
All differences are taken to the statement of profit and loss. Non
-- monetary items that are measured in terms of historical cost in
a foreign currency are translated using the exchange rates at the
dates of the initial transactions. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange
rates at the date when the fair value is determined. The gain or
loss arising on translation of non-monetary items measured at fair
value is treated in line with the recognition of the gain or loss
on the change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in
other comprehensive income ("OCI") or profit or loss are also
recognised in OCI or profit or loss, respectively).
On consolidation, the assets and liabilities of foreign
operations are translated into euros at the rate of exchange
prevailing at the reporting date and their statements of profit or
loss are translated at the exchange rates at the dates of the
transactions, or where appropriate, the average exchange rates for
the period. The foreign exchange differences arising on translation
for consolidation are recognised in OCI. On disposal of a foreign
operation, the component of OCI relating to that particular foreign
operation is reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign operation
and any fair value adjustments to the carrying amounts of assets
and liabilities arising on the acquisition are treated as assets
and liabilities of the foreign operation and translated at the spot
rate of exchange at the reporting date.
(h) Revenue recognition
Rental income
Rental income from operating leases and licence agreements
containing leases is recognised on a straight-line basis over the
term of the relevant lease unless another systematic basis is more
representative of the time pattern in which the benefit derived
from the leased asset is diminished. Fixed or determinable rental
increases, which can take the form of actual amounts or agreed
percentages, are recognised on a straight-line basis over the term
of material leases. If the increases are related to a price index
to cover inflationary cost increases, then the policy is to apply
the price index from the date it is known on a straight-line
basis.
The value of rent free periods and all similar lease incentives
is spread on a straight-line basis over the term of material leases
only. Where there is a reasonable expectation that the tenant will
exercise break options, the value of rent free periods and all
similar lease incentives is booked up to the break date.
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control
of the goods or services is transferred to the customer at an
amount that reflects the consideration to which the Group expects
to be entitled in exchange for those goods or services.
The Group mainly generates revenue from contracts with customers
for services rendered to tenants including management charges and
other expenses recoverable from tenants based on the Group's right
to recharge tenants for costs incurred (with or without markup) on
a day-to-day basis ("service charge income"). These services are
specified in the lease agreements and separately invoiced. Service
charge income is recognised as revenue when the performance
obligations of the services specified in the lease agreements are
met.
The individual activities vary significantly throughout the day
and from day to day; however, the nature of the overall promise of
providing property management service remains the same each day.
Accordingly, the service performed each day is distinct and
substantially the same. These services represent a series of daily
services that are individually satisfied over time because the
tenants simultaneously receive and consume the benefits provided by
the Group. The actual service provided during each reporting period
is determined using cost incurred as the input method.
Transaction prices are regularly updated and are estimated at
the beginning of each year based on previous costs and estimated
spend. Service charge budgets are prepared carefully to make sure
that they are realistic and reasonable. Variable consideration is
only included in the transaction price to the extent it is highly
probable that a significant reversal in the amount of cumulative
revenue recognised will not occur. Performance obligations related
to service charge revenue is discharged by the Company continuously
and on a daily basis, through the provision of utilities and other
services to tenants. Changes in service charge revenue are linked
to changes in the cost of fulfilling the obligation or the value to
a tenant at a given period of time. Accordingly, the variable
consideration is allocated to each distinct period of service (i.e.
each day) as it meets the variable consideration allocation
exception criteria.
Service charge expenses are based on actual costs incurred and
invoiced together with an estimate of costs to be invoiced in
future periods as receipt of final invoices from suppliers can take
up to twelve months after the end of the financial period. The
estimates are based on expected consumption rates and historical
trends and take into account market conditions at the time of
recording.
Service charge income is based on service charge expense and
takes into account recovery rates which are largely derived from
estimated occupancy levels. Service charge costs related to vacant
space are irrecoverable.
The Group acts as a principal in relation to these services, and
records revenue on a gross basis, as it controls the specified
goods or services before transferring them to tenants.
Where amounts invoiced to tenants are greater than the revenue
recognised at the period end date, the difference is recognised as
unearned revenue when the Group has unconditional right to
consideration, even if the payments are non-refundable. Where
amounts invoiced are less than the revenue recognised at the period
end date, the difference is recognised as contract assets or, when
the Group has a present right to payment, as receivables albeit
unbilled.
Rental income, fee income and other income from managed
properties
As the Group derives income and incurs expenses relating to
properties it manages but does not own, such income and expense is
disclosed separately within revenue and direct costs. Income
relating to managed properties is accounted for according to
revenue recognition accounting policies set out above. The Group
identifies itself as a Principal in this arrangement as it controls
and manages the services provide to its customers.
Allocation of revenues earned through all-inclusive lease and
licence arrangements
The Group has entered into leases and licensing arrangements
(which contain a lease) where the revenue due from the tenant is an
all-inclusive price, representing lease income (recognised in
accordance with IFRS 16) and service charge income (recognised in
accordance with IFRS 15). Management have estimated the allocation
of the revenues using the relevant service charge costs incurred
and the occupancy of the properties where all-inclusive lease and
license arrangements are in place. The allocation resulted in
EUR24.0m (2022: EUR5.7m) being recorded as service charge
income.
Interest income
Interest income is recognised as it accrues (using the effective
interest method, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
instrument).
(i) Leases
Group as lessor
Leases where the Group does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases.
Group as lessee
All contracts that give the Group the right to control the use
of an identified asset over a certain period of time in return for
consideration are considered leases within the meaning of IFRS 16
"Leases" ("IFRS 16").
For all contracts that meet the definition of leases according
to IFRS 16, the Group, at the commencement date of the lease (i.e.
the date the underlying asset is available for use), recognises
lease liabilities equal to the present value of the future lease
payments, discounted to reflect the term-specific incremental
borrowing rate if the interest rate implicit in the lease is not
readily determinable. Lease liabilities are subsequently increased
by the periodic interest expenses and reduced by the lease payments
made during the financial year.
Correspondingly, right of use assets are initially recognised at
cost under IFRS 16 which is the amount of the lease liabilities
(plus any advance payments that have already been made or any
initial direct costs). Subsequently, the right of use assets are
generally measured at cost, taking depreciation (calculated
straight-line over the lease term) and impairments into account and
are presented separately in the statement of financial position
except for right of use assets that meet the definition of IAS 40
"Investment Property" ("IAS 40") which are presented as investment
property and subsequently measured at fair value in line with the
measurement rules set out in IAS 40.
Periods resulting from extension or termination options granted
on a unilateral basis are assessed on a case-by-case basis and are
only taken into account if their use is sufficiently probable.
The Group utilises the recognition exemptions provided by IFRS
16 and does not apply IFRS 16 to leases with a contractual term of
twelve months or less or to leases in which the underlying asset is
of low value (on a case-by-case basis).
Lease payments associated with short-term leases and with leases
of low-value assets are recognised as expenses on a straight-line
basis over the lease term.
Right-of-use assets relating to office spaces are depreciated on
a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets.
(j) Income tax
Certain subsidiaries may be subject to foreign taxes in respect
of foreign sources of income. Sirius Real Estate Limited is a UK
resident for tax purposes. The Group's UK property business is a UK
Real Estate Investment Trust ("REIT"). As a result, the Group's UK
property business does not pay UK corporation tax on its profits
and gains from the qualifying rental business in the UK.
Non-qualifying UK profits and gains continue to be subject to
corporation tax as normal.
Current income tax
Current income tax assets and liabilities are measured at the
reporting date at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively
enacted by the reporting date.
Deferred income tax
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements, with the
following exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of
the transaction, does not give rise to equal taxable and deductible
temporary differences and affects neither accounting nor taxable
profit or loss;
-- in respect of taxable temporary differences associated with
investments in subsidiaries, where the timing of the reversal of
the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable
future; and
-- deferred tax assets are only recognised to the extent that it
is probable that taxable profit will be available against which the
deductible temporary differences, carried forward tax credits or
tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply in
the year when the related asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the reporting date.
(k) Sales tax
Revenues, expenses and assets are recognised net of the amount
of sales tax except:
-- where the sales tax incurred on a purchase of assets or
services is not recoverable from the taxation authority, in which
case the sales tax is recognised as part of the cost of acquisition
of the asset or as part of the expense item as applicable; and
-- receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the statement of financial position.
(l) Investment properties
Investment properties are properties that are either owned by
the Group or held under a lease which are held for long-term rental
income and/or capital appreciation.
Investment properties owned by the Group are initially
recognised at cost, including transaction costs when the control of
the property is transferred. Where recognition criteria are met,
the carrying amount includes subsequent costs to add to or replace
part of an investment property. Subsequent to initial recognition,
investment properties are stated at fair value, which reflects
market conditions at the reporting date as determined by
professional external valuer. Gains or losses arising from changes
in the fair values of investment properties are included in the
income statement in the period in which they arise.
The German properties are valued on the basis of a ten to
fourteen year discounted cash flow model supported by comparable
evidence. The discounted cash flow calculation is a valuation of
rental income considering non-recoverable costs and applying a
discount rate for the current income risk over a ten to fourteen
year period. After ten to fourteen years, a determining residual
value (exit scenario) is calculated, discounted to present
value.
The UK properties are valued in accordance with the RICS
Traditional Red Book valuation methodology, where the income being
generated is capitalised by an appropriate yield. Yields are based
on comparable evidence of similar quality assets which have traded
in the open market. The yield applied reflects the age, location,
ownership, customer base and agreement type.
Investment properties relating to leased assets are recognised
in accordance with IFRS 16 (see policy in note 2(i)). Subsequent to
initial recognition, investment properties relating to leased
assets are stated at fair value, which reflects market conditions
at the reporting date. Gains or losses arising from changes in the
fair values of investment properties are included in the income
statement in the period in which they arise.
The fair value of investment properties relating to leased
assets as at 31 March 2023 and 31 March 2022 have been arrived at
on the basis of a valuation carried out at that date by management.
The valuation is based upon assumptions including future rental
income and expenditure in accordance with the conditions of the
related lease agreements. The properties are valued on the basis of
a discounted cash flow model with the measurement period equal to
the term of the lease agreements.
(m) Disposals of investment property
Investment property disposals are recognised when control of the
property transfers to the buyer, which typically occurs on the date
of completion. Profit or loss arising on disposal of investment
properties is calculated by reference to the most recent carrying
value of the asset adjusted for subsequent capital expenditure.
(n) Assets held for sale and disposal groups
(i) Investment properties held for sale
Investment properties held for sale are separately disclosed at
the asset's fair value. In order for an investment property held
for sale to be recognised, the following conditions must be
met:
-- the asset must be available for immediate sale in its present condition and location;
-- the asset is being actively marketed;
-- the asset's sale is expected to be completed within twelve
months of classification as held for sale;
-- there must be no expectation that the plan for selling the
asset will be withdrawn or changed significantly; and
-- the successful sale of the asset must be highly probable.
(ii) Disposal groups
The Group classifies non-current assets and disposal groups as
held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through
continuing use. Non-current assets and disposal groups classified
as held for sale are measured at the lower of their carrying amount
and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of a
disposal group, excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met
only when the sale is highly probable and the disposal group is
available for immediate sale in its present condition. Actions
required to complete the sale should indicate that it is unlikely
that significant changes to the sale will be made or that the
decision to sell will be withdrawn. Management must be committed to
the plan to sell the asset with the sale expected to be completed
within one year from the date of the classification.
Property, plant and equipment and intangible assets are not
depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented
separately in the statement of financial position.
Additional disclosures are provided in note 15.
(o) Plant and equipment
Recognition and measurement
Items of plant and equipment are stated at historical cost less
accumulated depreciation and any impairment loss.
Depreciation
Where parts of an item of plant and equipment have different
useful lives, they are accounted for as separate items of plant and
equipment.
Depreciation is charged in the income statement on a
straight-line basis over the estimated useful lives of an item of
the fixed assets. The estimated useful lives are as follows:
Plant and equipment three to ten years
Fixtures and fittings three to fifteen years
Depreciation methods, useful lives and residual values are
reviewed at each reporting date.
(p) Intangible assets
The Group recognises both internally developed and acquired
intangible assets. These intangibles are valued at cost.
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and
accumulated impairment losses. Intangible assets with a definite
useful life are amortised on a straight-line basis over their
respective useful lives. Their useful lives are between three and
five years. Any amortisation of these assets is recognised as such
under administrative expenses in the consolidated income
statement.
Intangible assets with an indefinite useful life, including
goodwill, are not amortised.
Development expenditures on an individual project are recognised
as an intangible asset when the Group can demonstrate:
-- the technical feasibility of completing the intangible asset
so that the asset will be available for use or sale;
-- its intention to complete and its ability and intention to
use or sell the asset;
-- how the asset will generate future economic benefits;
-- the availability of resources to complete the asset; and
-- the ability to measure reliably the expenditure during
development.
Following initial recognition of the development expenditure as
an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses. Amortisation of the
asset begins when development is complete, and the asset is
available for use. It is amortised over the period of expected
future benefit. Amortisation is recorded in cost of sales. During
the period of development, the asset is tested for impairment
annually.
Goodwill arising on consolidation represents the excess of the
cost of the purchase consideration over the Group's interest in the
fair value of the identifiable assets and liabilities of a
subsidiary at the date of acquisition.
Goodwill is initially recognised at cost and is subsequently
measured at cost less any accumulated impairment losses. Goodwill
is tested annually for impairment, or more frequently when there is
an indication that the business to which the goodwill applies may
be impaired.
(q) Trade and other receivables
Rent and service charge receivables and any contract assets do
not contain significant financing components and are measured at
the transaction price. Other receivables are initially measured at
fair value plus transaction costs. Subsequently, trade and other
receivables are measured at amortised cost and are subject to
impairment (see note 2(y)). The Group applies the simplified
impairment model of IFRS 9 in order to determine expected credit
losses in trade and other receivables, including lease
incentives.
The Group assesses on a forward-looking basis the expected
credit losses associated with its trade and other receivables. A
provision for impairment is made for the lifetime expected credit
losses on initial recognition of the receivable. If collection is
expected in more than one year, the balance is presented within
non-current assets.
(r) Treasury Shares and shares issued to the Employee Benefit
Trust
Own equity instruments are deducted from equity. No gain or loss
is recognised in the income statement on the purchase, sale, issue
or cancellation of the Group's equity instruments.
(s) Share-based payments
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the
number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of
awards that meet the related service and non-market performance
conditions at the vesting date.
(t) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand,
demand deposits and other short-term, highly liquid investments
with original maturities of three months or less that are readily
convertible to a known amount of cash and are subject to an
insignificant risk of change in value. Cash is measured at
amortised cost.
(u) Bank borrowings
Interest-bearing bank loans and borrowings are initially
recorded at fair value net of directly attributable transaction
costs.
Subsequent to initial recognition, interest-bearing loans and
borrowings are measured at amortised cost using the effective
interest rate method.
When debt refinancing exercises are carried out, existing
liabilities will be treated as being extinguished when the new
liability is substantially different from the existing liability.
In making this assessment, the Group will consider the transaction
as a whole, taking into account both qualitative and quantitative
characteristics in order to make the assessment.
(v) Trade payables
Trade payables are initially measured at fair value and are
subsequently measured at amortised cost, using the effective
interest rate method.
(w) Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
(x) Dividends
Interim dividend distributions to shareholders are recognised in
the financial statements when paid. Final dividend distributions to
the Company's shareholders are recognised as a liability in the
consolidated financial information in the period in which the
dividends are approved by the shareholders. The final dividend
relating to the year ended 31 March 2023 will be approved and
recognised in the financial year ending 31 March 2024.
(y) Impairment excluding investment properties
(i) Financial assets
A financial asset (excluding financial assets at fair value
through profit and loss) is assessed at each reporting date to
determine whether there is any impairment. The Group recognises an
allowance for expected credit losses ("ECLs") for all receivables
and contract assets held by the Group. ECLs are based on the
difference between the contractual cash flows due in accordance
with the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from
the sale of collateral held or other credit enhancements that are
integral to the contractual terms and that are not recognised
separately by the Group.
For rent and service charge receivables and any contract assets,
the Group applies a simplified approach in calculating ECLs. The
Group does not track changes in credit risk, but instead recognises
a loss allowance based on lifetime ECLs at each reporting date
(i.e. a loss allowance for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the
default). In determining the ECLs the Group takes into account any
recent payment behaviours and future expectations of likely default
events (i.e. not making payment on the due date) based on
individual customer credit ratings, actual or expected insolvency
filings or Company voluntary arrangements and market expectations
and trends in the wider macroeconomic environment in which our
customers operate.
Impairment losses are recognised in the income statement. For
more information refer to note 7. Trade and other receivables are
written off once all avenues to recover the balances are exhausted
and there is no expectation of recovery.
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than investment property, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable amount is
estimated.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of
assets that generate cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups
of assets (the "cash-generating unit").
An impairment loss is recognised if the carrying amount of an
asset or cash-generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in the income statement.
Impairment losses recognised in profit or loss in respect of
cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit (or group of
units) on a pro rata basis.
(z) Current versus non-current classification
The Group presents assets and liabilities in the statement of
financial position based on current/non-current classification,
except for deferred tax assets and liabilities which are classified
as non-current assets and liabilities. An asset is current when it
is:
-- expected to be realised or intended to be sold or consumed in the normal operating cycle;
-- held primarily for the purpose of trading;
-- expected to be realised within twelve months after the reporting period; or
-- cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting period.
All other assets are classified as non-current.
A liability is current when:
-- it is expected to be settled in the normal operating cycle;
-- it is held primarily for the purpose of trading;
-- it is due to be settled within twelve months after the reporting period; or
-- there is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period.
The Group classifies all other liabilities as non-current.
(aa) Business combinations and goodwill
(i) Subsidiary undertakings
Business combinations are accounted for using the acquisition
method at the acquisition date, which is the date on which control
is transferred to the Group. Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns
through its power over the investee. In assessing control, the
Group takes into consideration potential voting rights that
currently are exercisable, as well as other factors including board
representation. The financial statements of subsidiaries are
included in the Consolidated Financial Statements from the date
that control passes.
The Group measures goodwill as the fair value of the
consideration paid or payable less the net fair value of the
identifiable assets, liabilities assumed and contingent liabilities
acquired, all measured as of the acquisition date.
( ii) Associates
Associates are those entities over which the Group has
significant influence, but which are not subsidiary undertakings or
joint ventures. The results and assets and liabilities of
associates are incorporated in these financial statements using the
equity method of accounting. Investments in associates are carried
in the balance sheet at cost as adjusted by post-acquisition
changes in the Group's share of the net assets of the associate,
less any impairment in the value of individual investments.
(ab) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings, EPRA net
asset value metrics and EPRA loan to value, which are widely used
alternative metrics to their IFRS equivalents (further details on
EPRA best practice recommendations can be found at www.epra.com).
Note 12 to the financial statements includes a reconciliation of
basic and diluted earnings to EPRA earnings. Note 13 to the
financial statements includes a reconciliation of net assets to
EPRA net asset value metrics. Note 24 to the financial statements
includes a calculation of EPRA loan to value ratio.
The Directors are required, as part of the JSE Listing
Requirements, to disclose headline earnings; accordingly, headline
earnings are calculated using basic earnings adjusted for
revaluation gain net of related tax, gain/loss on sale of
properties net of related tax, recoveries from prior disposals of
subsidiaries net of related tax, NCI relating to revaluation and
revaluation gain/loss on investment property relating to associates
net of related tax. Note 12 to the financial statements includes a
reconciliation between IFRS and headline earnings.
The Directors have chosen to disclose adjusted earnings in order
to provide an alternative indication of the Group's underlying
business performance; accordingly, it excludes the effect of
adjusting items net of related tax. Note 12 to the financial
statements includes a reconciliation of adjusting items included
within adjusted earnings, with certain adjusting items stated
within administrative expenses in note 7 and certain finance costs
in note 10.
The Directors have chosen to disclose adjusted profit before tax
and funds from operations in order to provide an alternative
indication of the Group's underlying business performance and to
facilitate the calculation of its dividend pool; a reconciliation
between profit before tax and funds from operations is included
within note 29 to the financial statements. Within adjusted profit
before tax are adjusting items as described above gross of related
tax.
Further details on non-IFRS measures can be found in the
business analysis section of this document.
3. Significant accounting judgements, estimates, assumptions and
other sources of estimation uncertainty
Judgements
In the process of applying the Group's accounting policies,
which are described in note 2, the Directors have made the
following judgements that have the most significant effect on the
amounts recognised in the financial information:
Acquisition and disposal of properties
Property transactions can be complex in nature and material to
the financial statements. To determine when an acquisition or
disposal should be recognised, management considers whether the
Group assumes or relinquishes control of the property, and the
point at which this is obtained or relinquished. Consideration is
given to the terms of the acquisition or disposal contracts and any
conditions that must be satisfied before the contract is fulfilled.
In the case of an acquisition, management must also consider
whether the transaction represents an asset acquisition or business
combination.
Estimates and assumptions
Key estimates
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below:
Valuation of owned and leased investment properties (including
those recognised within assets held for sale or a disposal
group)
The fair value of the Group's owned investment properties was
determined by Cushman & Wakefield LLP (2022: Cushman &
Wakefield LLP), an independent valuer. After adjusting investment
properties for lease incentive accounting, the book value of
investment properties excluding assets held for sale is shown as
EUR2,098.5m (2022: EUR2,074.9m) as disclosed in note 14.
The Cushman & Wakefield LLP valuation approach is explained
in note 2(l).
The fair value of the Group's leased investment properties was
determined by management. The book value of leased investment
properties is shown as EUR24.5m (2022: EUR25.1m) as disclosed in
note 14.
As a result of the level of estimation used in arriving at the
market valuations, the amounts which may ultimately be realised in
respect of any given property may differ from the valuations shown
on the statement of financial position. Refer to note 14 for
further information, including sensitivity analysis.
Cash flow and covenant compliance forecasts
Cash flow forecasts and covenant compliance forecasts are
prepared by management to assess the going concern assumption and
viability of the Group. Estimations of future revenue and
expenditure are made to determine the expected cash inflows and
outflows, considering expectations for occupancy levels, forecast
expenditure and the current market climate. The impact of the
forecasted cash flows and underlying property valuations are
considered when assessing forecast covenant compliance and
anticipated levels of headroom on the Group's debt facilities.
Refer to note 2(d) for further details, which includes the
assessment of forecasted cash flows and covenant compliance in
management's going concern assessment.
Other sources of estimation uncertainty
The following areas of estimation uncertainty are not presented
to comply with the requirements of paragraph 125 of IAS 1
"Presentation of Financial Statements" as it is not expected there
is a risk of a material adjustment to the carrying amount of assets
and liabilities within the next financial year. They are presented
as additional disclosure of estimates used in the accounts.
Sustainability
In preparing the financial statements, Management considered the
impact of climate change, taking into account the relevant
disclosures in the Strategic Report, including those made in
accordance with the recommendations of the Taskforce on
Climate-related Financial Disclosures. The Group also considered
the work performed to date in preparing its potential net zero
pathway for the German portfolio to 2045 based on the CRREM
("Carbon Risk Real Estate Monitor") methodology, the leading global
standard for operational decarbonisation of real estate assets, and
in line with the Science Based Target initiative ("SBTi") and the
Energy Performance Certificate ("EPC") regulatory requirements for
the UK. At the time of preparing the financial statements, the
Group expects a limited exposure in relation to the investment
properties, based on the current climate-related requirements. On
this basis, the Directors concluded that climate change did not
have a material impact on the financial reporting judgements and
estimates for the period, consistent with this assessment this is
not expected to have a significant impact on the Group's going
concern of viability assessment.
4. Business combinations
The provisions of IFRS 3 are applied to all business
combinations.
Acquisitions in 2022
Acquisition of Helix Investments Limited
Acquired
Type of Date of voting
Company acquisition acquisition rights
---------------------------------- ------------- ------------- --------
15 Nov
Helix Investments Limited, Jersey Purchase 2021 100%
---------------------------------- ------------- ------------- --------
The purchase price amounted to EUR242.8m (GBP206.8m). The
consideration was transferred in the form of cash. On completion a
loan advanced by the seller and held by Helix Investments Limited
of EUR45.0m (GBP38.3m) was also repaid in cash.
The Group incurred costs of EUR5.3m for legal advice and due
diligence in connection with the business combination and these are
included in administrative expenses.
Helix Investments Limited is the holding company of the BizSpace
Group business, which is a leading provider of regional flexible
workspace, offering light industrial, workshop, studio and out of
town office units to a wide range of businesses across the UK. The
acquisition therefore provides Sirius with a unique opportunity to
enter with immediate scale an under-served market via a one-step
acquisition of an established platform. It provides Sirius with a
high-quality portfolio, offering significant organic growth
potential in rental pricing in a UK market characterised by supply
constraints. The BizSpace Group business is also highly
complementary to Sirius' existing platform, allowing for meaningful
operational and financial synergies to drive value creation for
Sirius shareholders.
The acquired identifiable assets and liabilities as at 15
November 2021 are presented at their fair values in the following
table in accordance with the final purchase price allocation:
Helix
Investments
Limited
EURm
-------------------------- ------------
Investment property 421.1
Other non-current assets 3.0
Current assets 3.5
Cash and cash equivalents 33.1
Loans (214.5)
Current liabilities (23.7)
Lease liabilities (12.2)
Deferred tax liabilities (4.7)
-------------------------- ------------
Net assets 205.6
-------------------------- ------------
Purchase price 242.8
-------------------------- ------------
Goodwill 37.2
-------------------------- ------------
Based on final purchase price allocation, goodwill arising on
the purchase of Helix Investments Limited amounts to EUR37.2m as at
15 November 2021. At 31 March 2022, the Directors assessed the
computed goodwill to determine if it represented recoverable value
over and above the value included in the acquired investment
properties and other net assets, and concluded that there was
insufficient evidence to support such recovery and so wrote-off the
goodwill. As at 31 March 2022 the carrying amount of the goodwill
is EURnil as it has been impaired as per note 17.
The gross amounts of acquired trade receivables and impairment
losses recognised were as follows as at 15 November 2021.
Helix
Investments
Limited
EURm
------------------------------- ------------
Gross trade receivables 1.1
Expected credit loss provision (0.5)
------------------------------- ------------
Net trade receivables 0.6
------------------------------- ------------
Due to first-time consolidation as at 15 November 2021, the
acquired company has contributed revenue of EUR21.0m and profit
after tax of EUR47.9m to consolidated revenue and consolidated
profit in the year ended 31 March 2022.
Had the company already been fully consolidated as at 1 April
2021, consolidated revenue and consolidated profit after tax in the
year ended 31 March 2022 would have been as follows:
1 April
2021 to
31 March
2022
EURm
----------------------- ---------
Group revenue 243.9
Group profit after tax 211.1
----------------------- ---------
5. Operating segments
Information on each operating segment based on the geographical
location in which the Group operates is provided to the chief
operating decision maker, namely the Group's Senior Management
Team, on an aggregated basis and represented as operating profit
and expenses.
The investment properties that the Group owns are aggregated
into segments with similar economic characteristics such as the
nature of the property, the products and services it provides, the
customer type for the product served, and the method in which the
services are provided. The Group's Senior Management Team considers
that this is best achieved through the operating segments of the
German assets and the UK assets. The Group's investment properties
are considered to be their own segment. The properties at each
location (Germany and UK) have similar economic characteristics.
These have been aggregated into two operating segments based on
location in accordance with the requirements of IFRS 8. The Group's
Senior Management Team considers the two locations to be separate
segments. Further disaggregation of the investment properties is
disclosed in note 14 owing to the range in values of key inputs and
assumptions underpinning the property valuation. Consequently, the
Group is considered to have two reportable operating segments, as
follows:
-- Germany; and
-- the UK.
Consolidated information by segment is provided on a net
operating income basis, which includes revenues made up of gross
rents from third parties and direct expenses, gains/losses on
property valuations, property disposals, and control of
subsidiaries. All of the Group's share of profit of associates and
administrative expenses including goodwill impairment, amortisation
and depreciation are separately disclosed as part of operating
profit. Group administrative costs, finance income and expenses and
change in fair value of derivative financial instruments are
disclosed.
Income taxes and depreciation are not reported to the Senior
Management Team on a segmented basis. There are no sales between
segments.
The UK operating segment is a result of a business combination
as disclosed in note 4. As such the UK segment reportable figures
from the prior year are those from 15 November 2021 until 31 March
2022 whilst the Germany segment consists of the full annual period
ended 31 March 2022. There is no single tenant that makes up more
than 10% of each segment's revenue or Group revenue.
Year ended Year ended
31 March 2023 31 March 2022
------------------------ -----------------------
Germany UK Total Germany UK Total
EURm EURm EURm EURm EURm EURm
---------------------------- ------- ------ ------- ------- ------ ------
Rental and other
income from investment
properties 125.5 33.3 158.8 108.7 15.3 124.0
Service charge income
from investment properties 66.6 24.0 90.6 55.0 5.7 60.7
Rental and other
income from managed
properties 10.9 - 10.9 10.9 - 10.9
Service charge income
from managed properties 9.8 - 9.8 14.6 - 14.6
---------------------------- ------- ------ ------- ------- ------ ------
Revenue 212.8 57.3 270.1 189.2 21.0 210.2
---------------------------- ------- ------ ------- ------- ------ ------
Direct costs (96.7) (20.0) (116.7) (80.1) (7.6) (87.7)
---------------------------- ------- ------ ------- ------- ------ ------
Net operating income 116.1 37.3 153.4 109.1 13.4 122.5
(Loss)/gain on revaluation
of investment properties (3.9) (5.9) (9.8) 100.9 40.0 140.9
Gain/(loss) on disposal
of properties - 4.7 4.7 (0.4) (0.2) (0.6)
Recoveries from prior
disposals of subsidiaries - - - 0.1 - 0.1
Depreciation and
amortisation (4.2) (1.3) (5.5) (2.7) (0.5) (3.2)
Movement in expected
credit loss provision
(1) (1.0) - (1.0) (2.2) (0.1) (2.3)
Other administrative
expenses (1) (36.1) (6.7) (42.8) (32.1) (3.1) (35.2)
Goodwill impairment - - - (3.7) (37.2) (40.9)
Share of profit of
associates 2.6 - 2.6 6.9 - 6.9
---------------------------- ------- ------ ------- ------- ------ ------
Operating profit 73.5 28.1 101.6 175.9 12.3 188.2
---------------------------- ------- ------ ------- ------- ------ ------
Finance income 2.5 0.3 2.8 3.0 - 3.0
Amortisation of capitalised
finance costs (3.3) - (3.3) (2.6) - (2.6)
Other finance expense (10.8) (4.2) (15.0) (15.8) (4.9) (20.7)
Change in fair value
of derivative financial
instruments 0.9 - 0.9 1.0 - 1.0
---------------------------- ------- ------ ------- ------- ------ ------
Net finance costs (10.7) (3.9) (14.6) (14.4) (4.9) (19.3)
---------------------------- ------- ------ ------- ------- ------ ------
Segment profit for
the year before tax 62.8 24.2 87.0 161.5 7.4 168.9
---------------------------- ------- ------ ------- ------- ------ ------
(1) To conform to the current year presentation, the movement in
expected credit loss provision has been shown as a separate line
and this is a reallocation from other administrative expenses for
the year ended 31 March 2022.
31 March 2023 31 March 2022
----------------------- -----------------------
Germany UK Total Germany UK Total
EURm EURm EURm EURm EURm EURm
-------------------------- ------- ----- ------- ------- ----- -------
Segment assets
Investment properties 1,691.6 431.4 2,123.0 1,635.2 464.8 2,100.0
Investment in associates 26.7 - 26.7 24.1 - 24.1
Other non-current
assets (1) 21.9 3.8 25.7 21.6 3.2 24.8
-------------------------- ------- ----- ------- ------- ----- -------
Total segment non-current
assets 1,740.2 435.2 2,175.4 1,680.9 468.0 2,148.9
-------------------------- ------- ----- ------- ------- ----- -------
(1) Consists of plant and equipment, intangible assets and right of use assets.
6. Revenue
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------------- ---------- ----------
Rental and other income from investment properties 158.8 124.0
Service charge income from investment properties 90.6 60.7
Rental and other income from managed properties 10.9 10.9
Service charge income from managed properties 9.8 14.6
--------------------------------------------------- ---------- ----------
Total revenue 270.1 210.2
--------------------------------------------------- ---------- ----------
Other income relates primarily to income associated with
conferencing and catering of EUR4.3m (2022: EUR3.0m) and fee income
from managed properties of EUR5.3m (2022: EUR4.1m).
Total revenue from contracts with customers includes service
charge income and other income totalling EUR94.9m from investment
properties (2022: EUR63.7m) and EUR15.1m from managed properties
(2022: EUR18.7m). Service charge income and other income totalling
EUR85.2m from the German segment (2022: EUR76.4m) and EUR24.8m from
the UK segment (2022: EUR6.0m).
7. Operating profit
The following items have been charged in arriving at operating
profit:
Direct costs
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
------------------------------------------------------- ---------- ----------
Service charge costs relating to investment properties 92.8 66.1
Costs relating to managed properties 17.4 17.0
Non-recoverable maintenance 6.5 4.6
------------------------------------------------------- ---------- ----------
Direct costs 116.7 87.7
------------------------------------------------------- ---------- ----------
Movement in expected credit loss provision
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
---------------------------------------------------- ---------- ----------
Expected credit loss recognised 8.7 7.7
Expected credit loss reversed (7.7) (5.4)
---------------------------------------------------- ---------- ----------
Movement in expected credit loss provision (1) (see
note 25) 1.0 2.3
---------------------------------------------------- ---------- ----------
(1) To conform to the current year presentation, the movement in
expected credit loss provision has been shown as a separate line in
the consolidated income statement and this is a reallocation from
other administrative expenses for the year ended 31 March 2022.
The expected credit loss provision has increased during the year
mainly due to the increase of gross trade receivables as a result
of acquired assets in the financial year.
Administrative expenses
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
-------------------------------------------------- ---------- ----------
Audit and non-audit fees to audit firm 1.7 1.4
Legal and professional fees 6.0 3.9
Other administration costs 5.7 (0.3)
Share-based payments 5.5 4.2
Employee costs 19.4 16.0
Director fees and expenses 0.7 0.6
Depreciation of plant and equipment (see note 16) 2.1 1.2
Amortisation of intangible assets (see note 17) 1.3 1.2
Depreciation of right of use assets (see note 18) 2.1 0.8
Marketing 3.1 2.3
Exceptional items 0.7 7.1
-------------------------------------------------- ---------- ----------
Administrative expenses (1) 48.3 38.4
-------------------------------------------------- ---------- ----------
(1) To conform to the current year presentation, the movement in
expected credit loss provision has been shown as a separate line in
the consolidated income statement and this is a reallocation from
other administrative expenses for the year ended 31 March 2022.
Other administration costs include net foreign exchange losses
of EUR0.2m as a result of declining British pound sterling ("GBP")
rates throughout the year (2022: EUR2.0m gain as a result of the
increased foreign currency cash balances as at the year end).
Employee costs as stated above relate to costs which are not
recovered through service charge.
Exceptional items relate to the following:
Year ended Year ended
31 March 2023 31 March 2022
EURm EURm
------------------------------------------------------------------------------- -------------- --------------
Acquisition costs in relation to business combinations - 5.3
Other fees for projects(1) 2.4 -
Legal case costs(2) 0.4 0.9
Lease agreement termination fees (3) 0.9 0.5
Internal tax restructuring costs - 0.4
Decrease in tax liabilities recognised on acquisition of the BizSpace Group(4) (3.0) -
------------------------------------------------------------------------------- -------------- --------------
Total 0.7 7.1
------------------------------------------------------------------------------- -------------- --------------
(1) The other fees for projects amounting to EUR2.4m (2022:
EURnil) relate to capital management measures undertaken by the
Group. These measures are non-recurring in nature, outside the
normal course of business and have been identified as exceptional
items.
(2) The legal case costs amounting to EUR0.4m relate to multiple
cases which differ from the cases the Group faced in the year end
31 March 2022 amounting to EUR0.9m. These legal cases are
non-recurring in nature, outside the normal course of business and
have been identified as exceptional items.
(3) The lease agreement termination fee amounting to EUR0.9m
(2022: EUR0.5m) was paid in compensation for early termination of a
rental contract at the end of July 2022 within the UK segment of
the Group. These termination fees are non-recurring in nature,
outside the normal course of business and have been identified as
exceptional items.
(4) In the current year, the Group identified an error in the
accrual of tax liabilities arising in the BizSpace Group as at 31
March 2022, resulting in an overstatement of the tax liability of
EUR5.0m, of which EUR3.0m arose on acquisition. These were assessed
as not being material to the 31 March 2022 financial statements and
the reduction in the liability has been recorded in the current
year financial statements. The amounts have been recorded within
administrative expenses under exceptional items and the taxation
(see note 11) lines of the income statement.
The following services have been provided by the Group's
auditor:
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
------------------------------------------- ---------- ----------
Audit fees to audit firm:
Audit of consolidated financial statements 1.0 1.1
Audit of subsidiary undertakings 0.2 0.2
------------------------------------------- ---------- ----------
Total audit fees 1.2 1.3
------------------------------------------- ---------- ----------
Audit related assurance services 0.1 0.1
Other assurance services 0.4 0.2
------------------------------------------- ---------- ----------
Total assurance services 0.5 0.3
------------------------------------------- ---------- ----------
Total fees for non-audit services 0.5 0.3
------------------------------------------- ---------- ----------
Total fees 1.7 1.6
------------------------------------------- ---------- ----------
For the year ended 31 March 2022, other assurance services
include services in the amount of EUR0.2m relating to the corporate
bond issuances which have been capitalised to the loan issue
costs.
8. Employee costs and numbers
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
------------------------------------ ---------- ----------
Wages and salaries 30.7 24.3
Social security costs 4.3 3.8
Defined contribution pension scheme 0.5 0.4
Other employment costs 0.9 0.4
------------------------------------ ---------- ----------
Total 36.4 28.9
------------------------------------ ---------- ----------
Included in the costs related to wages and salaries for the year
are expenses of EUR5.5m (2022: EUR4.2m) relating to the granting or
award of shares (see note 9). The costs for all periods include
those relating to Executive Directors.
All employees are employed directly by one of the following
Group subsidiary companies: Sirius Facilities GmbH, Sirius
Facilities (UK) Limited, Curris Facilities & Utilities
Management GmbH, SFG NOVA GmbH, Sirius Finance (Guernsey) Limited,
BizSpace Limited, BizSpace II Limited, M25 Business Centres Limited
and Sirius Corporate Services B.V. The average number of people
employed by the Group during the year was 421 (2022: 416),
expressed in full-time equivalents. In addition, as at 31 March
2023, the Board of Directors consists of six Non-Executive
Directors (2022: six) and two Executive Directors (2022:
three).
9. Employee schemes
Equity-settled share-based payments
2018 LTIP
The LTIP for the benefit of the Executive Directors and the
Senior Management Team was approved in 2018 with three separate
grant dates. Awards granted under the LTIP are made in the form of
nil-cost options which vest after the three year performance period
with vested awards being subject to a further holding period of two
years. Awards are split between ordinary and outperformance awards.
Ordinary awards carry both adjusted net asset value per share
("TNR") (two-thirds of award) and relative total shareholder return
("TSR") (one-third of award) performance conditions and
outperformance awards carry a sole TNR performance condition. The
employee's tax obligation will be determined upon the vesting date
of the share issue.
June 2020 grant
3,600,000 ordinary share awards were granted under the scheme on
15 June 2020 with a total charge for the award of EUR2.3m. Charges
for the awards are based on fair values calculated at the grant
date and expensed on a straight-line basis over the period that
individuals are providing service to the Company in respect of the
awards. For the 15 June 2020 LTIP grant an expense of EUR0.8m is
recognised in the consolidated income statement to 31 March 2023. A
total of 250,000 shares were forfeited during the performance
period by two participants who left the Group.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the award that were
granted on 15 June 2020:
TNR TSR
------------------------------------------- ------------- ------------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary
Calculation for award 1/3 ordinary 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 of return - % (0.677) p.a. (0.677) p.a.
Expected outcome of performance conditions
- % 100 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 EUR2.1m over three years. Another 93,039
share awards have been granted throughout the performance period as
part of dividend equivalents resulting in a total number of shares
of 4,543,039. Charges for the awards are based on fair values
calculated at the grant date and expensed on a straight-line basis
over the period that individuals are providing service to the
Company in respect of the awards. For the 16 June 2019 LTIP grant
an expense of EURnil is recognised in the consolidated income
statement to 31 March 2023.
The fair value per share for the TNR and TSR elements of the
award was determined using Black-Scholes and Monte-Carlo models
respectively with the following assumptions used in the
calculation:
TNR TSR
------------------------------------------- ---------------------- ------------------
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary
award/ outperformance
award 1/3 ordinary award
Share price at grant date - 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
- % 100/24.5 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 EUR1.7m
was paid for the participants' tax liabilities.
The remaining 1,531,361 shares vested on 23 November 2022. Final
vesting resulted in the exercise of 811,621 shares with a weighted
average share price of EUR1.02 at the date of exercise. 719,740
shares have been surrendered in relation to the settlement of
certain participants' tax liabilities arising in respect of the
vesting.
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 EUR4.7m. Charges
for the awards are based on fair values calculated at the grant
date and expensed on a straight-line basis over the period that
individuals are providing service to the Company in respect of the
awards. For the 2 August 2021 LTIP grant an expense of EUR1.6m is
recognised in the consolidated income statement to 31 March 2023. A
total of 725,000 shares were forfeited during the performance
period by two participants who left the Group.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the award that were
granted on 2 August 2021:
TNR TSR
------------------------------------------ ------------- ------------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary
Calculation for award 1/3 ordinary 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 EUR2.6m. Charges
for the awards are based on fair values calculated at the grant
date and expensed on a straight-line basis over the period that
individuals are providing service to the Company in respect of the
awards. For the 18 July 2022 LTIP grant an expense of EUR0.6m is
recognised in the consolidated income statement to 31 March 2023. A
total of 635,000 shares were forfeited during the performance
period by two participants who left the Group.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 18 July 2022:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
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 the senior employees was approved
in 2021. Awards granted under the SIP are made in the form of a
conditional right to receive a specified number of shares for nil
cost which vest after the three year performance period (on 1 March
2025 for the 2021 award) with vested awards being subject to a
further restricted period of one year when shares cannot be sold.
Awards are subject to adjusted net asset value per share ("TNR")
(two-thirds of award) and relative total shareholder return ("TSR")
(one-third of award) performance conditions. Awards are equity
settled. The employees' tax obligation will be determined upon the
vesting date of the share issue.
September 2021 grant
3,074,500 share awards were granted under the scheme on 7
September 2021 with a total charge for the award of EUR3.7m on the
basis that 0% of awards are forfeited during the vesting period.
Charges for the awards are based on fair values calculated at the
grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of
the awards. For the 7 September 2021 SIP grant an expense of
EUR1.1m is recognised in the consolidated income statement to 31
March 2023.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the award that were
granted on 7 September 2021:
TNR TSR
------------------------------------------ ------------- ------------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary
Calculation for award 1/3 ordinary 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 and the pairwise correlation between
comparator companies and TSR performance between the start of the
performance period and the date of grant.
The weighted average fair value of share options granted on 7
September 2021 is 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 EUR0.03m. Charges
for the awards are based on fair values calculated at the grant
date and expensed on a straight-line basis over the period that
individuals are providing service to the Company in respect of the
awards. For the 1 April 2022 SIP grant an expense of EUR0.01m is
recognised in the consolidated income statement to 31 March
2023.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 1 April 2022:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
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 EUR0.1m. Charges
for the awards are based on fair values calculated at the grant
date and expensed on a straight-line basis over the period that
individuals are providing service to the Company in respect of the
awards. For the 1 August 2022 SIP grant an expense of EUR0.03m is
recognised in the consolidated income statement to 31 March
2023.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 1 August 2022:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
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.
August 2022 grant - the BizSpace Group awards
1,600,000 ordinary share awards were granted under the scheme on
1 August 2022 for certain BizSpace Group employees with a total
charge for the award of EUR1.3m. Charges for the awards are based
on fair values calculated at the grant date and expensed on a
straight-line basis over the period that individuals are providing
service to the Company in respect of the awards. For the 1 August
2022 SIP grant an expense of EUR0.4m is recognised in the
consolidated income statement to 31 March 2023.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 1 August 2022:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
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.
Deferred Bonus Plan
The Deferred Bonus Plan ("DBP") is subject to rules approved by
the Board and to the Directors' Remuneration Policy (approved by
shareholders triennially) for Executive Directors of Sirius Real
Estate Limited only.
The Executive Directors consisting of the Chief Executive
Officer, the Chief Financial Officer and the Chief Investment
Officer of the Company are currently required to participate in the
DBP.
The participants are subject to annual performance bonus
conditions and objectives to be agreed by the Remuneration
Committee. At the end of the applicable financial year, and on
receipt of an annual performance bonus, as determined by the
Remuneration Committee, 65% or more is awarded as cash with the
remainder transferred into shares in the Company. Of the 35%, half
is deferred for one year and the remaining half is deferred for two
years. The DBP had been previously treated as cash settled as it
was not material to the financial statements.
Number of share awards
Movements in the number of awards outstanding are as
follows:
Year ended Year ended
31 March 2023 31 March 2022
---------------------- ------------------------
Weighted Weighted
Number average average
of exercise Number exercise
share price of price
awards EURm share awards EURm
---------------------------------------- ----------- --------- ------------- ---------
Balance outstanding as at the beginning
of the year (nil exercisable) 15,278,619 - 15,584,750 -
Maximum granted during the year 5,353,067 - 7,302,831 -
Forfeited during the year (1,610,000) - (195,000) -
Exercised during the year (2,431,714) - (4,934,934) -
Shares surrendered to cover employee
tax obligations (2,111,325) - (2,479,028) -
---------------------------------------- ----------- --------- ------------- ---------
Balance outstanding as at year end
(nil exercisable) 14,478,647 - 15,278,619 -
---------------------------------------- ----------- --------- ------------- ---------
Employee benefit schemes
A reconciliation of share-based payments and employee benefit
schemes and their impact on the consolidated income statement is as
follows:
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
----------------------------------------------------------- ---------- ------------
Charge relating to 2018 LTIP - June 2019 grant - 1.1
Charge relating to 2018 LTIP - June 2020 grant 0.8 0.8
Charge relating to 2021 LTIP - August 2021 grant 1.6 1.1
Charge relating to 2021 LTIP - July 2022 grant 0.6 -
Charge relating to 2019 SIP - August 2019 grant - 0.6
Charge relating to 2021 SIP - September 2021 grant 1.1 0.6
Charge relating to 2021 SIP - August 2022 grant (including
the BizSpace Group awards) 0.4 -
DBP 1.0 -
----------------------------------------------------------- ---------- ----------
Total consolidated income statement charge relating
to share-based payments 5.5 4.2
----------------------------------------------------------- ---------- ------------
An amount of EUR5.5m (2022: EUR1.9m) is recognised in other
distributable reserves as per the consolidated statement of changes
in equity. In addition, an amount of EUR1.7m has been paid for
participants' tax liabilities in relation to share-based payment
schemes.
10. Finance income, finance expense and change in fair value of
derivative financial instruments
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------------------- ---------- ----------
Bank interest income 0.6 0.1
Finance income from associates 2.2 2.9
--------------------------------------------------------- ---------- ----------
Finance income 2.8 3.0
--------------------------------------------------------- ---------- ----------
Bank loan interest expense (13.6) (11.5)
Interest expense related to lease liabilities (see
note 18) (1.1) (0.5)
Amortisation of capitalised finance costs (3.3) (2.6)
--------------------------------------------------------- ---------- ----------
Total interest expense (18.0) (14.6)
Bank charges and bank interest expense on deposits (0.3) (0.9)
Refinancing costs, exit fees and prepayment penalties - (7.8)
--------------------------------------------------------- ---------- ----------
Other finance costs (0.3) (8.7)
--------------------------------------------------------- ---------- ----------
Finance expense (18.3) (23.3)
--------------------------------------------------------- ---------- ----------
Change in fair value of derivative financial instruments 0.9 1.0
--------------------------------------------------------- ---------- ----------
Net finance expense (14.6) (19.3)
--------------------------------------------------------- ---------- ----------
For the year ended 31 March 2022, included within refinancing
costs are exit fees and early prepayment penalties of EUR6.9m that
directly related to the early repayment of loans and cost in
relation to the restructuring of debt in the amount of EUR0.9m.
The change in fair value of derivative financial instruments of
EUR0.9m (2022: EUR1.0m) reflects the change in the market valuation
of these financial instruments.
11. Taxation
Consolidated income statement
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------------- ---------- ----------
Current income tax
Current income tax charge (4.8) (6.2)
Current income tax charge relating to disposals of
investment properties - -
Adjustments in respect of prior periods(1) 1.8 0.1
--------------------------------------------------- ---------- ----------
Total current income tax (3.0) (6.1)
--------------------------------------------------- ---------- ----------
Deferred tax
Relating to origination and reversal of temporary
differences (4.3) (14.8)
--------------------------------------------------- ---------- ----------
Total deferred tax (4.3) (14.8)
--------------------------------------------------- ---------- ----------
Income tax charge reported in the income statement (7.3) (20.9)
--------------------------------------------------- ---------- ----------
(1) In the current year, the Group identified an error in the
accrual of tax liabilities arising in the BizSpace Group as at 31
March 2022, resulting in an overstatement of the tax liability of
EUR5.0m of which EUR3.0m arose on acquisition. These were assessed
as not being material to the 31 March 2022 financial statements and
the reduction in the liability has been recorded in the current
year financial statements. The amounts have been recorded within
administrative expenses under exceptional items and the taxation
(see note 11) lines of the income statement.
The German corporation tax rate of 15.825% is used in the tax
reconciliation for the Group. Taxation for other jurisdictions is
calculated at the rates prevailing in each jurisdiction.
The reconciliation of the effective tax rate is explained
below:
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
------------------------------------------------------------- ---------- ----------
Profit before tax 87.0 168.9
------------------------------------------------------------- ---------- ----------
Current tax using the German corporation tax rate
of 15.825% (2022: 15.825%) 13.8 26.7
Effects of:
Deductible interest on internal financing(1) (4.4) (5.4)
Tax exempt gain from selling of investments and dividends(2) (0.4) (1.1)
Non-deductible expenses (0.3) 0.4
Change in unrecognised deferred tax - tax effect
of utilisation of tax losses not previously recognised(3) 2.8 (10.5)
Adjustments in respect of prior periods(4) (1.8) (0.1)
German trade tax 0.4 -
Tax exempt income under REIT regime(5) (3.7) -
Goodwill impairment(6) - 6.5
Difference in foreign tax rates (7) 0.9 1.5
Deferred tax - current year movements - 1.0
Rate difference between current tax and deferred
tax - 1.9
------------------------------------------------------------- ---------- ----------
Total income tax charge in the income statement 7.3 20.9
------------------------------------------------------------- ---------- ----------
(1) The item refers to intra-group financing and also includes
the difference in foreign tax rates within the jurisdiction of the
recipient of the interest income and the German corporation tax
rate.
(2) The tax exempt gain from selling of investments and
dividends in the current year relates to the profits of associates
only.
(3) Following the acquisition of the BizSpace Group on 15
November 2021, the BizSpace Group has entered into the UK REIT
regime effective from 1 April 2022. The result of the REIT
conversion included the derecognition of deferred tax assets and
deferred tax liabilities on investment properties as at 31 March
2022. The reconciling item increased as at 31 March 2023 due to the
use of previously not recognised tax losses.
(4) To align with tax returns filed for previous years, an
adjustment (primarily arising on tax gains on disposal of
investment properties) has been made within the financial year.
(5) The BizSpace Group has entered into the UK REIT regime
effective from 1 April 2022 which exempts income from property
rental business and profits from disposal of assets from UK tax
charge.
(6) An impairment of EUR40.9m in relation to the goodwill was
included as a permanent item in the tax reconciliation of last
year.
(7) As the current UK corporation tax rate is 19% this item
shows the difference between this rate and the German corporation
tax rate of 15.825% used in the above reconciliation.
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable
to the following:
Assets Liabilities Net
------------------ ------------------ ------------------
31 March 31 March 31 March 31 March 31 March 31 March
2023 2022 2023 2022 2023 2022
EURm EURm EURm EURm EURm EURm
---------------------------------- -------- -------- -------- -------- -------- --------
Revaluation of investment
property - - (99.5) (95.4) (99.5) (95.4)
Rent free adjustments - - (0.7) (0.6) (0.7) (0.6)
Capitalised own
works - - (0.1) (0.1) (0.1) (0.1)
Hedging (swaps) - - (0.2) (0.1) (0.2) (0.1)
Fair value adjustment
on leased investment
properties 3.9 4.1 (3.8) (4.3) 0.1 (0.2)
Tax losses 20.2 20.3 - - 20.2 20.3
Fixed asset temporary
differences - 0.2 - - - 0.2
---------------------------------- -------- -------- -------- -------- -------- --------
Deferred tax assets/(liabilities) 24.1 24.6 (104.3) (100.5) (80.2) (75.9)
---------------------------------- -------- -------- -------- -------- -------- --------
For accounting periods beginning on or after 1 January 2023 IASB
ED/2019/5 amended the application of the initial recognition
exemption for transactions giving rise to offsetting deferred tax
assets and deferred tax liabilities. In respect of IFRS 16, the
Group adopted the amendments to the initial recognition exemption
under IAS 12 already in last year and recognises a deferred tax
asset in respect of the IFRS 16 lease liabilities and a deferred
tax liability in respect of IFRS 16 right of use, resulting in a
net deferred tax asset for the current year.
Movement in deferred tax during the year is as follows:
31 March Recognised Exchange Acquisition 31 March
2022 in income differences of a subsidiary 2023
EURm EURm EURm EURm EURm
---------------------------------- -------- ---------- ------------ ---------------- --------
Revaluation of investment
property (95.4) (4.1) - - (99.5)
Rent free adjustments (0.6) (0.1) - - (0.7)
Capitalised own works (0.1) - - - (0.1)
Hedging (swaps) (0.1) (0.1) - - (0.2)
Fair value adjustment on
leased investment properties (0.2) 0.3 - - 0.1
Tax losses 20.3 (0.1) - - 20.2
Fixed asset temporary differences 0.2 (0.2) - - -
Other short-term temporary
differences - - - - -
---------------------------------- -------- ---------- ------------ ---------------- --------
Total (75.9) (4.3) - - (80.2)
---------------------------------- -------- ---------- ------------ ---------------- --------
31 March Recognised Exchange Acquisition 31 March
2021 in income differences of a subsidiary 2022
EURm EURm EURm EURm EURm
---------------------------------- -------- ---------- ------------ ---------------- --------
Revaluation of investment
property (73.9) (8.7) - (12.8) (95.4)
Rent free adjustments (0.6) - - - (0.6)
Capitalised own works - (0.1) - - (0.1)
Hedging (swaps) 0.2 (0.3) - - (0.1)
Fair value adjustment on
leased investment properties - (5.7) - 5.5 (0.2)
Tax losses 18.0 2.3 - - 20.3
Fixed asset temporary differences - (1.0) - 1.2 0.2
Other short-term temporary
differences - (1.3) - 1.3 -
---------------------------------- -------- ---------- ------------ ---------------- --------
Total (56.3) (14.8) - (4.8) (75.9)
---------------------------------- -------- ---------- ------------ ---------------- --------
The Group has not recognised a deferred tax asset on EUR240.2m
(2022: EUR256.9m) of tax losses carried forward and future share
scheme deductions due to uncertainties over recovery. There is no
expiration date on EUR240.2m of the losses and future share scheme
tax deductions will convert to tax losses on realisation.
A change in ownership of the Group may result in restriction on
the Group's ability to use tax losses in certain tax
jurisdictions.
Recognised and unrecognised temporary differences in the
acquired BizSpace Group of EUR54m were derecognised as at 31 March
2022 following the BizSpace Group's entry to the UK REIT regime
effective 1 April 2022. A deferred tax asset of EUR0.05m relating
to the excess of capital allowances over qualifying net book value
in the BizSpace Group is expected to be recoverable by the residual
business of the BizSpace Group post REIT conversion. For the
financial year beginning 1 April 2023 the normal corporation tax
rate was increased from 19% to 25%. This may have a potential
impact on any taxable profits made by the residual business of the
BizSpace Group post REIT conversion and other UK operations only
from that date.
A deferred tax liability is recognised on temporary differences
of EURnil (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
---------------------- ---------------------- --------------------
31 March 31 March 31 March 31 March 31 March 31 March
2023 2022 2023 2022 2023 2022
EURm EURm EURm EURm EURm EURm
---------------------------------- ---------- ---------- ---------- ---------- ---------- --------
UK - 0.2 - - - 0.2
Germany 24.1 24.4 (104.3) (100.5) (80.2) (76.1)
Cyprus - - - - - -
---------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Deferred tax assets/(liabilities) 24.1 24.6 (104.3) (100.5) (80.2) (75.9)
---------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Assets Liabilities Net
----------------------- ---------------------- --------------------
31 March 31 March 31 March 31 March 31 March 31 March
2023 2022 2023 2022 2023 2022
EURm EURm EURm EURm EURm EURm
------------------------ ----------- ---------- ---------- ---------- ---------- --------
UK - - (0.4) (7.3) (0.4) (7.3)
Germany - - (4.6) (2.7) (4.6) (2.7)
Cyprus - - (0.4) (0.4) (0.4) (0.4)
------------------------ ----------- ---------- ---------- ---------- ---------- --------
Current tax liabilities - - (5.4) (10.4) (5.4) (10.4)
------------------------ ----------- ---------- ---------- ---------- ---------- --------
12. Earnings per share
The calculations of the basic, diluted, EPRA, headline and
adjusted earnings per share are based on the following data:
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------------------- ------------- -------------
Earnings attributable to the owners of the Company
Basic earnings 79.6 147.9
Diluted earnings 79.6 147.9
EPRA earnings 88.2 70.7
Diluted EPRA earnings 88.2 70.7
Headline earnings 89.0 58.4
Diluted headline earnings 89.0 58.4
--------------------------------------------------------- ------------- -------------
Adjusted
Basic earnings 79.6 147.9
Add loss/(deduct gain) on revaluation of investment
properties 9.8 (140.9)
(Deduct gain)/add loss on disposal of properties (4.7) 0.6
Deduct recoveries from prior disposals of subsidiaries
(net of related tax) - (0.1)
Tax in relation to the revaluation gains/losses of
investment properties and gains/losses on disposal
of properties above less REIT related tax effects 4.2 14.6
Non-controlling interest ("NCI") relating to revaluation
(net of related tax) - 0.2
Goodwill impairment - 40.9
Add loss/(deduct gain) on revaluation of investment
property relating to associates 0.5 (6.0)
Tax in relation to the revaluation gains/losses on
investment property relating to associates above (0.4) 1.2
--------------------------------------------------------- ------------- -------------
Headline earnings after tax 89.0 58.4
Deduct change in fair value of derivative financial
instruments (net of related tax and NCI) (0.8) (0.8)
Deduct revaluation expense relating to leased investment
properties (1.5) (5.6)
Add adjusting items (net of related tax and NCI)(1) 6.2 19.1
--------------------------------------------------------- ------------- -------------
Adjusted earnings after tax 92.9 71.1
--------------------------------------------------------- ------------- -------------
Number of shares
Weighted average number of ordinary shares for the
purpose of basic, headline, adjusted and basic EPRA
earnings per share 1,167,757,975 1,097,082,162
--------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of diluted earnings, diluted headline earnings,
diluted adjusted earnings and diluted EPRA earnings
per share 1,183,626,763 1,112,360,781
--------------------------------------------------------- ------------- -------------
Basic earnings per share 6.82c 13.48c
--------------------------------------------------------- ------------- -------------
Diluted earnings per share 6.73c 13.29c
--------------------------------------------------------- ------------- -------------
Basic EPRA earnings per share 7.55c 6.44c
--------------------------------------------------------- ------------- -------------
Diluted EPRA earnings per share 7.45c 6.36c
--------------------------------------------------------- ------------- -------------
Headline earnings per share 7.62c 5.32c
--------------------------------------------------------- ------------- -------------
Diluted headline earnings per share 7.52c 5.25c
--------------------------------------------------------- ------------- -------------
Adjusted earnings per share 7.96c 6.48c
--------------------------------------------------------- ------------- -------------
Adjusted diluted earnings per share 7.85c 6.39c
--------------------------------------------------------- ------------- -------------
(1) See reconciliation between adjusting items as stated within
earnings per share and those stated within administrative expenses
in note 7.
Year ended Year ended
31 March 31 March
2023 2022
Notes EURm EURm
-------------------------------------------- ----- ---------- ----------
Exceptional items 7 0.7 7.1
Refinancing costs, exit fees and prepayment
penalties 10 - 7.8
Share-based payments 7 5.5 4.2
-------------------------------------------- ----- ---------- ----------
Adjusting items as per note 12 6.2 19.1
-------------------------------------------- ----- ---------- ----------
The following table shows the reconciliation of basic to
headline earnings, separately disclosing the impact before tax
(gross column) and after tax (net column):
Year ended Year ended
31 March 2023 31 March 2022
---------------- ----------------
Gross Net Gross Net
EURm EURm EURm EURm
--------------------------------------- ------- ------- ------- -------
Basic earnings 79.6 147.9
Add loss/(deduct gain) on revaluation
of investment properties 9.8 14.0 (140.9) (126.3)
(Deduct gain)/add loss on disposal
of properties (4.7) (4.7) 0.6 0.6
Deduct recoveries from prior disposals
of subsidiaries - - (0.1) (0.1)
NCI relating to revaluation 0.1 - 0.2 0.2
Goodwill impairment - - 40.9 40.9
Add loss/(deduct gain) on revaluation
of investment property relating to
associates 0.5 0.1 (6.0) (4.8)
--------------------------------------- ------- ------- ------- -------
Headline earnings 89.0 58.4
--------------------------------------- ------- ------- ------- -------
EPRA earnings
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------------------- ---------- ----------
Basic and diluted earnings attributable to owners
of the Company 79.6 147.9
Add loss/(deduct gain) on revaluation of investment
properties 9.8 (140.9)
(Deduct gain)/add loss on disposal of properties
(net of related tax) (4.7) 0.6
Deduct recoveries from prior disposals of subsidiaries
(net of related tax) - (0.1)
Refinancing costs, exit fees and prepayment penalties - 7.8
Goodwill impairment - 40.9
Acquisition costs in relation to business combinations - 5.3
Change in fair value of derivative financial instruments (0.9) (1.0)
Deferred tax in respect of EPRA fair value movements
on investment properties 4.3 14.8
NCI relating to revaluation (net of related tax) - 0.2
Add loss/(deduct gain) on revaluation of investment
property relating to associates 0.5 (6.0)
Tax in relation to the revaluation gains/losses on
investment property relating to associates (0.4) 1.2
--------------------------------------------------------- ---------- ----------
EPRA earnings 88.2 70.7
--------------------------------------------------------- ---------- ----------
For more information on EPRA earnings refer to Annex 1.
For the calculation of basic, headline, adjusted, EPRA and
diluted earnings per share the number of shares has been reduced by
7,492,763 own shares held (2022: 5,280,308 shares), which are held
by an Employee Benefit Trust on behalf of the Group.
The weighted average number of shares for the purpose of
diluted, diluted EPRA, diluted headline and adjusted diluted
earnings per share is calculated as follows:
Year ended Year ended
31 March 31 March
2023 2022
-------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of basic, basic EPRA, headline and adjusted
earnings per share 1,167,757,975 1,097,082,162
Weighted average effect of grant of LTIP and SIP
shares 15,868,789 15,278,619
Weighted average number of ordinary shares for
the purpose of diluted, diluted EPRA, diluted headline
and adjusted diluted earnings per share 1,183,626,764 1,112,360,781
-------------------------------------------------------- ------------- -------------
The Company has chosen to report EPRA earnings per share ("EPRA
EPS"). EPRA EPS is a definition of earnings as set out by the
European Public Real Estate Association. EPRA earnings represents
earnings after adjusting for gains/losses on revaluation of
investment properties, gains/losses on disposals of properties (net
of related tax), recoveries from prior disposals of subsidiaries
(net of related tax), refinancing costs, exit fees and prepayment
penalties, goodwill impairment, acquisition costs in relation to
business combinations, changes in fair value of derivative
financial instruments, (collectively, the "EPRA earnings
adjustments"), deferred tax in respect of the EPRA earnings
adjustments, NCI relating to revaluation (net of related tax),
gains/losses on revaluation of investment property relating to
associates and the related tax thereon.
13. Net asset value per share
31 March 31 March
2023 2022
EURm EURm
---------------------------------------------------- ------------- -------------
Net asset value
Net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) 1,197.1 1,190.7
Deferred tax liabilities (see note 11) 80.2 75.9
Derivative financial instruments at fair value (1.3) (0.3)
---------------------------------------------------- ------------- -------------
Adjusted net asset value attributable to the owners
of the Company 1,276.0 1,266.3
---------------------------------------------------- ------------- -------------
Number of shares
Number of ordinary shares for the purpose of net
asset value per share and adjusted net asset value
per share 1,168,371,222 1,166,880,684
Number of ordinary shares for the purpose of EPRA
NTA per share 1,182,849,869 1,182,159,303
Net asset value per share 102.46c 102.04c
Adjusted net asset value per share 109.21c 108.51c
EPRA NTA per share 108.11c 107.28c
---------------------------------------------------- ------------- -------------
EPRA NRV EPRA NTA EPRA NDV
31 March 2023 EURm EURm EURm
------------------------------------------- -------- -------- --------
Net asset value as at year end (basic) 1,197.1 1,197.1 1,197.1
------------------------------------------- -------- -------- --------
Diluted EPRA net asset value at fair value 1,197.1 1,197.1 1,197.1
------------------------------------------- -------- -------- --------
Group
Derivative financial instruments at fair
value (1.3) (1.3) n/a
Deferred tax in respect of EPRA fair value
movements on investment properties 80.2 80.1 (1) n/a
Intangibles as per note 17 n/a (4.1) n/a
Fair value of fixed interest rate debt n/a n/a 99.2
Real estate transfer tax 164.4 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value
movements on investment properties 7.0 7.0 (1) n/a
Fair value of fixed interest rate debt n/a n/a 9.9
Real estate transfer tax 9.3 n/a n/a
------------------------------------------- -------- -------- --------
Total EPRA NRV, NTA and NDV 1,456.7 1,278.8 1,306.2
------------------------------------------- -------- -------- --------
EPRA NRV, NTA and NDV per share 123.15c 108.11c 110.43c
------------------------------------------- -------- -------- --------
EPRA NRV EPRA NTA EPRA NDV
31 March 2022 EURm EURm EURm
------------------------------------------- -------- -------- --------
Net asset value as at year end (basic) 1,190.7 1,190.7 1,190.7
------------------------------------------- -------- -------- --------
Diluted EPRA net asset value at fair value 1,190.7 1,190.7 1,190.7
------------------------------------------- -------- -------- --------
Group
Derivative financial instruments at fair
value (0.3) (0.3) n/a
Deferred tax in respect of EPRA fair value
movements on investment properties 75.9 75.6 (1) n/a
Intangibles as per note 17 n/a (4.3) n/a
Fair value of fixed interest rate debt n/a n/a (22.2)
Real estate transfer tax 160.7 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value
movements on investment properties 6.5 6.5(1) n/a
Fair value of fixed interest rate debt n/a n/a 2.1
Real estate transfer tax 9.1 n/a n/a
------------------------------------------- -------- -------- --------
Total EPRA NRV, NTA and NDV 1,442.6 1,268.2 1,170.6
------------------------------------------- -------- -------- --------
EPRA NRV, NTA and NDV per share 122.03c 107.28c 99.02c
------------------------------------------- -------- -------- --------
(1) The Group intends to hold and does not intend in the long
term to sell any of the investment properties and has excluded such
deferred taxes for the whole portfolio as at year end except for
deferred tax in relation to assets held for sale.
For more information on adjusted net asset value and EPRA NRV,
NTA and NDV, refer to Annex 1.
The number of ordinary shares for the purpose of EPRA NRV, NTA
and NDV per share is calculated as follows:
31 March 31 March
2023 2022
---------------------------------------------------- ------------- -------------
Number of ordinary shares for the purpose of net
asset value per share and adjusted net asset value
per share 1,168,371,222 1,166,880,684
Effect of grant of LTIP & SIP shares 14,478,647 15,278,619
---------------------------------------------------- ------------- -------------
Number of ordinary shares for the purpose of EPRA
NRV, NTA and NDV per share 1,182,849,869 1,182,159,303
---------------------------------------------------- ------------- -------------
The number of shares has been reduced by 7,492,763 own shares
held (2022: 5,280,308 shares), which are held by an Employee
Benefit Trust on behalf of the Group.
14. Investment properties
The movement in the book value of investment properties is as
follows:
31 March 31 March
2023 2022
EURm EURm
----------------------------------------------------- -------- --------
Total investment properties at book value as at the
beginning of the year 2,100.0 1,362.2
Acquisition of a subsidiary (see note 4)(1) - 421.1
Additions - owned investment properties 44.7 162.8
Additions - leased investment properties 1.4 3.4
Capital expenditure and broker fees 29.9 22.5
Disposals (17.1) (1.8)
Reclassified as investment properties held for sale
(see note 15) (8.8) (13.7)
(Loss)/gain on revaluation above capex and broker
fees (7.7) 147.0
Adjustment in respect of lease incentives (0.6) (0.5)
Deficit on revaluation relating to leased investment
properties (1.5) (5.6)
Foreign exchange differences (17.3) 2.6
----------------------------------------------------- -------- --------
Total investment properties at book value as at
year end (2) 2,123.0 2,100.0
----------------------------------------------------- -------- --------
(1) An amount of EUR12.2m relate to leased investment properties.
(2) Excluding assets held for sale.
The reconciliation of the valuation carried out by the external
valuer to the carrying values shown in the consolidated statement
of financial position is as follows:
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------------------- -------- --------
Owned investment properties at market value per valuer's
report(1) 2,103.1 2,079.1
Adjustment in respect of lease incentives (4.6) (4.2)
Leased investment property market value 24.5 25.1
--------------------------------------------------------- -------- --------
Total investment properties at book value as at
year end (1) 2,123.0 2,100.0
--------------------------------------------------------- -------- --------
(1) Excluding assets held for sale.
The fair value (market value) of the Group's owned investment
properties as at year end has been arrived at on the basis of a
valuation carried out at that date by Cushman & Wakefield LLP
(2022: Cushman & Wakefield LLP), an independent valuer
accredited by the Royal Institute of Chartered Surveyors' ("RICS").
The fee arrangement with Cushman & Wakefield LLP for the
valuation of the Group's properties is fixed, subject to an
adjustment for acquisitions and disposals.
The value of each of the properties has been assessed in
accordance with the RICS valuation standards on the basis of market
value. The methodology and assumptions used to determine the fair
values of the properties are consistent with the previous year.
The weighted average lease expiry remaining across the owned
portfolio in Germany as at year end was 2.8 years (2022: 2.9
years). The weighted average lease expiry remaining across the
owned portfolio in the UK as at year end was 1.01 years (2022: 0.9
years). Licence agreements in the UK are rolling and are included
in the valuation.
The fair value (market value) of the Group's leased investment
properties as at year end has been arrived at on the basis of a
valuation carried out by management using discounted cash flows
similar to the approach of Cushman & Wakefield LLP. A
sensitivity analysis is not provided on the lease investment
properties as the balance is not considered material to the
financial statements.
The reconciliation of loss or gain on revaluation above capex as
per the consolidated income statement is as follows:
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
----------------------------------------------------- ---------- ----------
(Loss)/gain on revaluation above capex and broker
fees (7.7) 147.0
Adjustment in respect of lease incentives (0.6) (0.5)
Deficit on revaluation relating to leased investment
properties (1.5) (5.6)
----------------------------------------------------- ---------- ----------
(Loss)/gain on revaluation of investment properties
reported in the income statement (9.8) 140.9
----------------------------------------------------- ---------- ----------
Included in the loss or gain on revaluation of investment
properties reported in the income statement (excluding the
revaluation effects in respect of leased investment properties) are
gross gains of EUR39.2m and gross losses of EUR49.0m (2022: gross
gains of EUR160.4m and gross losses of EUR19.5m).
Other than the capital commitments disclosed in note 32, the
Group is under no contractual obligation to purchase, construct or
develop any investment property. The Group is responsible for
routine maintenance of the investment properties.
All investment properties are categorised as Level 3 fair values
as they use significant unobservable inputs. There have not been
any transfers between levels during the year. Investment properties
have been classed according to their asset type. Information on
these significant unobservable inputs per class of investment
property is disclosed below (excluding leased investment
properties).
The valuation for owned investment properties is (including
assets classified as held for sale) performed on a lease-by-lease
basis due to the mixed-use nature of the sites using the discounted
cash flow technique for the German portfolio and on a capitalised
income basis (where income is capitalised by an appropriate yield
which reflects the age, location, ownership, customer base and
agreement type) for the UK portfolio. This gives rise to large
ranges in the inputs.
Current Market
rental rental Gross
rate rate initial Net initial Discount
per sqm per sqm Occupancy yield yield factor Void period
EUR EUR % % % % months
------- ------------ ------------ ----------- --------- ----------- ---------- -----------
Market
31 March value
2023 EURm Low High Low High Low High Low High Low High Low High Low High
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------ ---- ---- --- ------
Traditional
business
parks
Mature 362.0 2.88 8.58 2.67 7.80 64.7 100.0 4.7 9.9 3.7 7.6 4.1 5.8 6 15
Value add 607.6 2.25 6.64 3.58 8.46 26.9 97.4 2.9 9.8 0.8 7.5 4.5 7.1 9 18
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------ ---- ---- --- ------
Total
traditional
business
parks 969.6 2.25 8.58 2.67 8.46 26.9 100.0 2.9 9.9 0.8 7.6 4.1 7.1 6 18
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------ ---- ---- --- ------
Modern
business
parks
Mature 200.4 5.38 8.64 3.93 8.15 94.3 100.0 3.6 10.5 2.4 9.3 4.1 5.4 6 15
Value add 250.1 2.92 9.76 3.91 10.35 54.5 92.8 5.5 9.4 3.8 7.4 4.8 7.3 9 24
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------ ---- ---- --- ------
Total modern
business
parks 450.5 2.92 9.76 3.91 10.35 54.5 100.0 3.6 10.5 2.4 9.3 4.1 7.3 6 24
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------ ---- ---- --- ------
Office
Mature 37.5 14.34 14.34 10.78 10.78 92.6 92.6 8.7 8.7 7.3 7.3 4.9 4.9 9 9
Value add 236.4 4.05 10.27 6.42 12.19 49.7 87.5 4.4 9.3 2.4 6.8 5.0 6.9 9 18
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------ ---- ---- --- ------
Total office 273.9 4.05 14.34 6.42 12.19 49.7 92.6 4.4 9.3 2.4 7.3 4.9 6.9 9 18
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------ ---- ---- --- ------
Total
Germany 1,694.0 2.25 14.34 2.67 12.19 26.9 100.0 2.9 10.5 0.8 9.3 4.1 7.3 6 24
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------ ---- ---- --- ------
Current Market rental
rental rate rate Net initial
per sqm per sqm Occupancy yield Void period
EUR EUR % % months
------ -------------- --------------- ----------- ------------- -------------
Market
31 March value
2023 EURm Low High Low High Low High Low High Low High
----------------- ------ ------ ------ ------ ------- ---- ----- ----- ------ ----- ------
Total mixed-use
schemes 102.4 2.09 20.25 5.46 23.58 42.0 93.3 4.0 10.8 4.00 12.00
----------------- ------ ------ ------ ------ ------- ---- ----- ----- ------ ----- ------
Total office 143.7 5.42 33.89 7.94 24.68 50.5 100.0 4.9 23.2 4.00 12.00
----------------- ------ ------ ------ ------ ------- ---- ----- ----- ------ ----- ------
Total industrial 171.6 2.23 8.19 2.55 12.99 64.1 100.0 3.8 12.4 4.00 12.00
----------------- ------ ------ ------ ------ ------- ---- ----- ----- ------ ----- ------
Total UK 417.7 2.09 33.89 2.55 24.68 42.0 100.0 3.8 23.2 4.00 12.00
----------------- ------ ------ ------ ------ ------- ---- ----- ----- ------ ----- ------
Current Market
rental rental Gross
rate rate initial Net initial Discount
per sqm per sqm Occupancy yield yield factor Void period
EUR EUR % % % % months
------- ------------ ----------- ----------- ---------- -------------- ---------- -----------
Market
31 March value
2022 EURm Low High Low High Low High Low High Low High Low High Low High
------------ ------- ----- ----- ---- ----- ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Traditional
business
parks
Mature 329.1 2.67 8.32 2.65 7.42 91.5 100.0 4.5 8.5 3.7 6.7 3.6 5.4 6 12
Value add 625.5 -(1) 8.16 3.49 8.46 -(1) 97.3 -(1) 9.0 (3.7)(1) 6.8 3.9 7.1 9 18
------------ ------- ----- ----- ---- ----- ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
traditional
business
parks 954.6 -(1) 8.32 2.65 8.46 -(1) 100.0 -(1) 9.0 (3.7)(1) 6.8 3.6 7.1 6 18
------------ ------- ----- ----- ---- ----- ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Modern
business
parks
Mature 195.8 5.03 8.13 3.74 7.68 91.8 100.0 5.0 9.8 4.1 8.4 3.6 5.0 6 15
Value add 213.1 2.86 10.28 3.76 10.15 74.9 97.8 2.9 9.4 1.6 6.6 4.4 7.3 9 24
------------ ------- ----- ----- ---- ----- ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total modern
business
parks 408.9 2.86 10.28 3.74 10.15 74.9 100.0 2.9 9.8 1.6 8.4 3.6 7.3 6 24
------------ ------- ----- ----- ---- ----- ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Office
Mature 10.2 10.07 10.07 9.38 9.38 87.1 87.1 6.4 6.4 5.2 5.2 4.5 4.5 9 9
Value add 266.9 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 -(1) 7.2 4.6 6.6 9 18
------------ ------- ----- ----- ---- ----- ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total office 277.1 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 -(1) 7.2 4.5 6.6 9 18
------------ ------- ----- ----- ---- ----- ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
Germany 1,640.6 -(1) 11.78 2.65 12.18 -(1) 100.0 -(1) 9.8 (3.7)(1) 8.4 3.6 7.3 6 24
------------ ------- ----- ----- ---- ----- ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Current Market rental
rental rate rate Net initial
per sqm per sqm Occupancy yield Void period
EUR EUR % % months
------ -------------- --------------- ----------- ------------- -------------
Market
value
31 March 2022 EURm Low High Low High Low High Low High Low High
----------------- ------ ------ ------ ------ ------- ---- ----- ------ ----- ----- ------
Total mixed-use
schemes 123.3 1.71 26.49 5.78 23.59 48.6 96.8 3.0 10.0 4 12
----------------- ------ ------ ------ ------ ------- ---- ----- ------ ----- ----- ------
Total office 153.1 -(1) 25.38 5.83 26.50 -(1) 100.0 -(1) 10.0 4 12
----------------- ------ ------ ------ ------ ------- ---- ----- ------ ----- ----- ------
Total industrial 175.4 1.04 10.94 2.39 11.24 65.1 100.0 3.0 10.0 4 12
----------------- ------ ------ ------ ------ ------- ---- ----- ------ ----- ----- ------
Total UK 451.8 -(1) 26.49 2.39 26.50 -(1) 100.0 -(1) 10.0 4 12
----------------- ------ ------ ------ ------ ------- ---- ----- ------ ----- ----- ------
(1) The Group acquired vacant investment properties during the
year ended 31 March 2022. As a result, the lower range for rental
rates, occupancy and yields is 0 or lower.
As a result of the level of judgement and estimates used in
arriving at the market valuations, the amounts which may ultimately
be realised in respect of any given property may differ from
valuations shown in the statement of financial position. Key inputs
are considered to be inter-related whereby changes in one key input
can result in changes in other key inputs. The impact of changes in
relation to the key inputs is also shown in the table below:
Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
in market rental in discount in gross initial in net initial
rates rates yield yield
EURm EURm EURm EURm
------- ------------------- ------------------ ------------------- ------------------
Market
31 March value
2023 EURm Increase Decrease Increase Decrease Increase Decrease Increase Decrease
------------------ ------- --------- -------- -------- -------- --------- -------- -------- --------
Total traditional
business
parks 969.6 48.9 (49.2) (19.3) 19.1 (73.1) 86.8 (106.6) 109.0
Total modern
business
parks 450.5 22.0 (21.7) (8.5) 9.3 (32.2) 37.9 (41.5) 47.4
Total office 273.9 14.0 (14.1) (5.6) 5.6 (20.8) 24.8 (28.3) 36.8
------------------ ------- --------- -------- -------- -------- --------- -------- -------- --------
Market value
Germany 1,694.0 84.9 (85.0) (33.4) 34.0 (126.1) 149.5 (176.4) 193.2
------------------ ------- --------- -------- -------- -------- --------- -------- -------- --------
Change of 5% Change of 0.5%
in market rental in net initial
rates yield
EURm EURm
------ ------------------- ------------------
Market
value
31 March 2023 EURm Increase Decrease Increase Decrease
------------------------ ------ --------- -------- -------- --------
Total mixed-use schemes 102.4 (6.2) 7.5 3.8 (3.6)
Total office 143.7 (6.8) 7.8 4.7 (4.5)
Total industrial 171.6 (10.8) 12.7 7.0 (6.6)
------------------------ ------ --------- -------- -------- --------
Market value UK 417.7 (23.8) 28.0 15.4 (14.8)
------------------------ ------ --------- -------- -------- --------
Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
in market rental in discount in gross initial in net initial
rates rates yield yield
EURm EURm EURm EURm
------- ------------------- ------------------ ------------------- ------------------
Market
31 March value
2022 EURm Increase Decrease Increase Decrease Increase Decrease Increase Decrease
------------------ ------- --------- -------- -------- -------- --------- -------- -------- --------
Total traditional
business
parks 954.6 48.5 (48.4) (19.6) 20.1 (84.2) 82.2 (98.0) 126.3
Total modern
business
parks 408.9 19.2 (19.4) (8.6) 8.4 (30.9) 36.8 (38.1) 48.1
Total office 277.1 14.5 (14.3) (5.8) 5.8 (23.0) 28.5 (37.9) 27.8
------------------ ------- --------- -------- -------- -------- --------- -------- -------- --------
Market value
Germany 1,640.6 82.2 (82.1) (34.0) 34.3 (138.1) 147.5 (174.0) 202.2
------------------ ------- --------- -------- -------- -------- --------- -------- -------- --------
Change of 5% Change of 0.5%
in market rental in net initial
rates yield
EURm EURm
------ ------------------- ------------------
Market
value
31 March 2022 EURm Increase Decrease Increase Decrease
------------------------ ------ --------- -------- -------- --------
Total mixed-use schemes 123.3 4.0 (4.4) (4.5) 4.4
Total office 153.1 5.8 (5.4) (4.3) 5.1
Total industrial 175.4 7.1 (6.3) (5.8) 6.8
------------------------ ------ --------- -------- -------- --------
Market value UK 451.8 16.9 (16.1) (14.6) 16.3
------------------------ ------ --------- -------- -------- --------
15. Assets held for sale
Investment properties held for sale
31 March 31 March
2023 2022
EURm EURm
----------------------- -------- --------
Magdeburg - 13.8
Wuppertal 8.8 -
----------------------- -------- --------
Balance as at year end 8.8 13.8
----------------------- -------- --------
The disclosures regarding valuation in note 14 are also
applicable to assets held for sale.
As at 31 March 2023, an amount of EUR8.8m relating to the sale
of the Wuppertal asset was received prior to the completion date of
1 April 2023 and was included in the cash at bank per note 22. As
at 31 March 2022, an amount of EUR13.8m relating to the sale of the
Magdeburg asset was received prior to the completion date of 1
April 2022 and was included in the cash at bank per note 22.
As a result, an equal and opposite position within other
payables was recognised. See note 23 for further details.
16. Plant and equipment
Plant and Fixtures
equipment and fittings Total
EURm EURm EURm
----------------------------------------- ---------- ------------- -----
Cost
As at 31 March 2022 2.7 8.4 11.1
Additions in year 0.8 3.3 4.1
Disposals in year (0.8) (1.4) (2.2)
Foreign exchange differences - (0.2) (0.2)
----------------------------------------- ---------- ------------- -----
As at 31 March 2023 2.7 10.1 12.8
----------------------------------------- ---------- ------------- -----
Depreciation
As at 31 March 2022 (1.1) (4.5) (5.6)
Charge for year (0.6) (1.5) (2.1)
Disposals in year 0.8 1.3 2.1
Foreign exchange differences (0.1) 0.1 -
----------------------------------------- ---------- ------------- -----
As at 31 March 2023 (1.0) (4.6) (5.6)
----------------------------------------- ---------- ------------- -----
Net book value as at 31 March 2023 1.7 5.5 7.2
----------------------------------------- ---------- ------------- -----
Cost
As at 31 March 2021 1.0 6.1 7.1
Acquisition of a subsidiary (see note 4) 0.8 1.8 2.6
Additions in year 0.9 0.5 1.4
Disposals in year - - -
Foreign exchange differences - - -
----------------------------------------- ---------- ------------- -----
As at 31 March 2022 2.7 8.4 11.1
----------------------------------------- ---------- ------------- -----
Depreciation
As at 31 March 2021 (0.7) (3.7) (4.4)
Charge for year (0.4) (0.8) (1.2)
Disposals in year - - -
Foreign exchange differences - - -
----------------------------------------- ---------- ------------- -----
As at 31 March 2022 (1.1) (4.5) (5.6)
----------------------------------------- ---------- ------------- -----
Net book value as at 31 March 2022 1.6 3.9 5.5
----------------------------------------- ---------- ------------- -----
17. Intangible assets
Software and
licences with
definite useful life Goodwill Total
EURm EURm EURm
----------------------------------------- --------------------- -------- ------
Cost
As at 31 March 2022 10.5 40.9 51.4
Additions in year 1.1 - 1.1
Disposals in year - - -
Foreign exchange differences - - -
----------------------------------------- --------------------- -------- ------
As at 31 March 2023 11.6 40.9 52.5
----------------------------------------- --------------------- -------- ------
Amortisation
As at 31 March 2022 (6.2) (40.9) (47.1)
Charge for year (1.3) - (1.3)
Disposals in year - - -
Foreign exchange differences - - -
----------------------------------------- --------------------- -------- ------
As at 31 March 2023 (7.5) (40.9) (48.4)
----------------------------------------- --------------------- -------- ------
Net book value as at 31 March 2023(1) 4.1 - 4.1
----------------------------------------- --------------------- -------- ------
Cost
As at 31 March 2021 7.9 3.7 11.6
Acquisition of a subsidiary (see note 4) 0.5 37.2 37.7
Additions in year 2.1 - 2.1
Disposals in year - - -
Foreign exchange differences - - -
----------------------------------------- --------------------- -------- ------
As at 31 March 2022 10.5 40.9 51.4
----------------------------------------- --------------------- -------- ------
Amortisation
As at 31 March 2021 (5.0) - (5.0)
Charge for year (1.2) - (1.2)
Disposals in year - - -
Impairment - (40.9) (40.9)
Foreign exchange differences - - -
----------------------------------------- --------------------- -------- ------
As at 31 March 2022 (6.2) (40.9) (47.1)
----------------------------------------- --------------------- -------- ------
Net book value as at 31 March 2022(1) 4.3 - 4.3
----------------------------------------- --------------------- -------- ------
(1) Included in the net book value is an amount of EUR1.1m
relating to intangible assets under development not yet amortised
(2022: EUR2.4m). All these development projects are expected to
finalise in the next financial year.
Internalisation of Asset Management Agreement
On 30 January 2012, a transaction was completed to internalise
the Asset Management Agreement and, as a result of the
consideration given exceeding the net assets acquired, goodwill of
EUR3.7m was recognised. The goodwill was allocated to the
cash-generating units comprising the Germany segment.
In the year ended 31 March 2022 indicators of impairment
relating to the goodwill balance were noted as the Group has
determined that the identified cash flows could no longer be
distinguished from those included in other assets held by the
cash-generating units in the Germany segment. This resulted in the
entirety of the balance being impaired and a consequent impairment
loss of EUR3.7m being recognised. Goodwill which has been impaired
may not be reversed in future periods.
Helix Investment Limited
On 15 November 2021, the business combination described in note
4 resulted in the recognition of goodwill due to the consideration
given exceeding the net assets required by EUR37.2m. The goodwill
balance was allocated to the cash-generating units comprising the
UK segment and an impairment test was performed at 31 March 2022 to
determine whether the recoverable amount of the cash-generating
units exceeds the carrying value. The key assumptions regarding
value in use were three year cash flow forecasts as prepared by
management of the group of cash-generating units and the discount
rate applied. Cash flows beyond three years are extrapolated using
an inflation figure of 2%. The discount rate used is a pre-tax rate
and reflects the risks specific to the real estate industry in the
UK. A discount rate of 7.13% and terminal value of 5.13% were
applied in the impairment review.
In the period between acquisition and the prior year ended 31
March 2022, the properties held by the BizSpace Group and the rent
roll of the UK segment increased in value significantly. The Group
considered these factors along with the value in use calculation in
assessing whether the goodwill was recoverable and concluded that
it was not. Whilst the Group's longer-term plans for the business
and the potential synergies with the broader Group are at an early
stage, based on the impairment review conducted the Group concluded
that there was not sufficient evidence to support the goodwill
balance over and above the cash flows already included in the
assessment of the fair value of investment properties and other
assets held by the Group. As a result, an impairment loss of
EUR37.2m was recognised for the year ended 31 March 2022. Goodwill
which has been impaired may not be reversed in future periods.
18. Right of use assets and lease liabilities
Set out below are the carrying amounts of right of use assets
(excluding those disclosed under investment properties) recognised
and the movements during the year:
Office Total
EURm EURm
----------------------- ------ -----
As at 31 March 2021 1.9 1.9
Additions 15.0 15.0
Depreciation expense (0.8) (0.8)
Lease modifications(1) (1.1) (1.1)
----------------------- ------ -----
As at 31 March 2022 15.0 15.0
----------------------- ------ -----
Additions 1.5 1.5
Depreciation expense (2.1) (2.1)
----------------------- ------ -----
As at 31 March 2023 14.4 14.4
----------------------- ------ -----
(1) Lease modifications relate to the early termination of the head office lease.
In addition to office spaces the Group is also counterparty to
long-term leasehold agreements and head leases relating to
commercial property. Right of use assets amounting to EUR24.5m
(2022: EUR25.1m) are classified as investment properties, of which
EUR2.8m (2022: EUR4.0m) relate to commercial property.
Set out below are the carrying amounts of lease liabilities and
the movements during the year:
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------- -------- --------
Balance as at the beginning of the year (38.7) (15.0)
Acquisition of a subsidiary (see note 4) - (12.2)
Accretion of interest (1.1) (0.5)
Additions (2.8) (18.4)
Lease modifications(1) - 1.1
Payments 2.3 6.4
Foreign exchange differences 0.7 (0.1)
--------------------------------------------- -------- --------
Balance as at year end (39.6) (38.7)
--------------------------------------------- -------- --------
Current lease liabilities as at year end (2.2) (1.1)
--------------------------------------------- -------- --------
Non-current lease liabilities as at year end (37.4) (37.6)
--------------------------------------------- -------- --------
(1) Lease modifications relate to the early termination of the head office lease.
The following table sets out the carrying amount, by maturity,
of the Group's lease liabilities:
Within
1 year 1-5 years 5+ years Total
31 March 2023 EURm EURm EURm EURm
----------------------- ------- --------- -------- ------
Commercial property(1) (0.2) (1.0) (0.3) (1.5)
Long-term leasehold(1) (0.2) (1.0) (20.4) (21.6)
Office space (1.8) (7.5) (7.2) (16.5)
----------------------- ------- --------- -------- ------
Total (2.2) (9.5) (27.9) (39.6)
----------------------- ------- --------- -------- ------
Within
1 year 1-5 years 5+ years Total
31 March 2022 EURm EURm EURm EURm
----------------------- ------- --------- -------- ------
Commercial property(1) (0.7) (0.9) (0.5) (2.1)
Long-term leasehold(1) (0.2) (1.0) (19.9) (21.1)
Office space (0.2) (6.3) (9.0) (15.5)
----------------------- ------- --------- -------- ------
Total (1.1) (8.2) (29.4) (38.7)
----------------------- ------- --------- -------- ------
(1) These lease liabilities relate to right of use assets recorded as investment properties.
Maturity analysis of lease liabilities using contractual
undiscounted payments is disclosed in note 25.
The overall weighted average discount rate used for the year is
2.7% (2022: 2.3%).
During the year expenses paid for leases of low-value assets and
short-term leases which are recognised straight-line over the lease
term (included in the administrative expenses) amounted to EUR0.6m
(2022: EUR0.5m).
In addition to leases of low-value assets and payments resulting
from short-term leases that are included in the cash flow from
operating activities, interest payments and repayments of lease
liabilities totalling EUR2.3m (2022: EUR6.4m) were incurred for the
year and are included in the cash flow from financing
activities.
19. Other non-current financial assets
31 March 31 March
2023 2022
EURm EURm
----------------------- -------- --------
Deposits 4.1 4.1
Loans to associates 44.3 44.2
----------------------- -------- --------
Balance as at year end 48.4 48.3
----------------------- -------- --------
Loans to associates relate to shareholder loans granted to
associates by the Group. The loans terminate on 31 December 2026
and are charged at a fixed interest rate. The expected credit loss
has been considered based on multiple factors such as history of
repayments, forward-looking budgets and forecasts. Based on the
assessment the expected credit loss was immaterial.
20. Investment in associates
The principal activity of the associates is the investment in,
and development of, commercial property located in Germany and to
provide conventional and flexible workspace. Since the associates
are individually immaterial the Group is disclosing aggregated
information of the associates.
The following table illustrates the summarised financial
information of the Group's investment in associates:
31 March 31 March
2023 2022
EURm EURm
-------------------------------- -------- --------
Current assets 28.4 20.0
Non-current assets 354.7 349.8
Current liabilities (15.6) (10.4)
Non-current liabilities (296.1) (294.1)
-------------------------------- -------- --------
Equity 71.4 65.3
Unrecognised accumulated losses 4.9 3.7
-------------------------------- -------- --------
Subtotal 76.3 69.0
-------------------------------- -------- --------
Group's share in equity - 35% 26.7 24.1
-------------------------------- -------- --------
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
---------------------------------------------------- ---------- ----------
Net operating income 21.1 19.9
(Loss)/gain on revaluation of investment properties (0.7) 18.9
Administrative expense (3.7) (3.0)
---------------------------------------------------- ---------- ----------
Operating profit 16.7 35.8
Net finance costs (8.8) (9.8)
---------------------------------------------------- ---------- ----------
Profit before tax 7.9 26.0
Taxation (1.9) (4.2)
Unrecognised loss/(profit) 1.3 (2.0)
---------------------------------------------------- ---------- ----------
Total profit and comprehensive income for the year
after tax 7.3 19.8
---------------------------------------------------- ---------- ----------
Group's share of profit for the year - 35% 2.6 6.9
---------------------------------------------------- ---------- ----------
Included within the non-current liabilities are shareholder
loans amounting to EUR126.8m (2022: EUR126.5m). As at year end no
contingent liabilities existed (2022: none). The associates had
contracted capital expenditure for development and enhancements of
EUR3.4m as at year end (2022: EUR2.0m).
The following table illustrates the movement in investment in
associates:
31 March 31 March
2023 2022
EURm EURm
---------------------------------------- -------- --------
Balance as at the beginning of the year 24.1 17.2
Dividend received - -
Share of profit 2.6 6.9
---------------------------------------- -------- --------
Balance as at year end 26.7 24.1
---------------------------------------- -------- --------
21. Trade and other receivables
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------- -------- --------
Gross trade receivables 22.4 18.8
Expected credit loss provision (see note 25) (8.7) (7.7)
---------------------------------------------- -------- --------
Net trade receivables 13.7 11.1
Other receivables 14.1 8.9
Prepayments 2.7 4.6
---------------------------------------------- -------- --------
Balance as at year end 30.5 24.6
---------------------------------------------- -------- --------
Other receivables include lease incentives of EUR4.6m (2022:
EUR4.0m) and accrued service charge income of EURnil (2022:
EUR1.0m).
For the year ended 31 March 2022, prepayments included costs of
EUR1.9m relating to the acquisition of a new site in Düsseldorf
that was notarised before 31 March 2022.
22. Cash and cash equivalents
31 March 31 March
2023 2022
EURm EURm
----------------------------------------- -------- --------
Cash at bank 99.2 127.4
Cash restricted under contractual terms:
Deposit for bank guarantees 1.3 1.4
Deposits received from tenants 23.8 22.2
----------------------------------------- -------- --------
Balance as at year end 124.3 151.0
----------------------------------------- -------- --------
Cash at bank earns interest at floating rates based on daily
bank deposit rates. The fair value of cash as at year end is
EUR124.3m (2022: EUR151.0m).
Tenants' deposits are legal securities of tenants retained by
the Group without the right to use these cash deposits for purposes
other than strictly tenant related transactions (e.g. move-out
costs, costs due to non-compliance with certain terms of the lease
agreement or late rent/service charge payments).
Cash is held by reputable banks and the Group assessed the
expected credit loss to be immaterial.
23. Trade and other payables
31 March 31 March
2023 2022
EURm EURm
---------------------------------- -------- --------
Trade payables 12.0 6.5
Accrued expenses 31.9 25.1
Interest and amortisation payable 5.6 5.6
Tenant deposits 23.8 22.2
Unearned revenue 10.6 7.9
Other payables 17.6 22.0
---------------------------------- -------- --------
Balance as at year end 101.5 89.3
---------------------------------- -------- --------
Accrued expenses include primarily costs totalling EUR16.4m
(2022: EUR11.0 m) relating to service charge costs, bonuses of
EUR4.5m (2022: EUR5.7m), costs relating to non-recurring project
costs of EUR2.8m (2022: EUR2.5m) and administrative expenses of
EUR2.4m (2022: EUR2.0m) that have not been invoiced to the
Group.
Included within other payables are credit balances due to
tenants in relation to over collections of service charge in amount
of EUR3.6m (2022: EUR2.6m). As of 31 March 2023, other payables
included EUR8.8m of proceeds relating to the sale of the Wuppertal
asset that is categorised as an asset held for sale at 31 March
2023 in advance of the completion date of 1 April 2023. As at 31
March 2022, other payables included EUR13.8m of proceeds relating
to the sale of the Magdeburg asset that is categorised as an asset
held for sale at 31 March 2022 in advance of the completion date of
1 April 2022. See note 15 for details of assets held for sale.
Unearned revenue includes service charge amounts of EUR3.1m (2022:
EUR1.2m). Service charge income is only recognised as income when
the performance obligations are met. All unearned revenue of the
prior year was recognised as revenue in the current year.
24. Interest-bearing loans and borrowings
Interest 31 March 31 March
rate Loan maturity 2023 2022
% date EURm EURm
-------------------------------- ---------- ---------------- -------- --------
Current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 58.2 1.9
- fixed rate facility 0.90 31 October 2023 110.4 1.5
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 0.7 0.8
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged (1) 31 December 2023 51.1 1.1
Floating
- floating rate facility (1) 31 December 2023 6.2 0.1
Schuldschein
Floating
- floating rate facility (2) 5 December 2022 - 5.0
Floating
- floating rate facility (2) 6 January 2023 - 10.0
- fixed rate facility 1.60 3 July 2023 20.0 -
Capitalised finance charges
on all loans (2.9) (0.8)
-------------------------------- ---------- ---------------- -------- --------
243.7 19.6
-------------------------------- ---------- ---------------- -------- --------
Non-current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 - 58.2
- fixed rate facility 0.90 31 October 2023 - 110.4
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 13.5 14.3
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged (1) 31 December 2023 - 51.1
Floating
- floating rate facility (1) 31 December 2023 - 6.2
Schuldschein
Floating
- floating rate facility (2) 6 January 2025 5.0 5.0
- fixed rate facility 1.70 3 March 2025 10.0 10.0
- fixed rate facility 1.60 3 July 2023 - 20.0
Corporate bond I
- fixed rate 1.125 22 June 2026 400.0 400.0
Corporate bond II
- fixed rate 1.75 24 November 2028 300.0 300.0
Capitalised finance charges
on all loans (7.8) (13.3)
-------------------------------- ---------- ---------------- -------- --------
720.7 961.9
-------------------------------- ---------- ---------------- -------- --------
Total 964.4 981.5
-------------------------------- ---------- ---------------- -------- --------
(1) Tranche 1 of this facility is fully hedged with a swap
charged at a rate of 1.40%; tranche 2 of this facility is fully
hedged with a swap charged at a rate of 1.25%; and EUR19.1m of
tranche 3 of this facility is fully hedged with a swap charged at a
rate of 0.91%. A EUR6.5m extension and the tranche 3 related
EUR0.5m arrangement fee are charged with a floating rate of 1.20%
over three-month EURIBOR (not less than 0%). The Group has not
adopted any hedge accounting.
(2) This unsecured facility has a floating rate of 1.70% over
six month EURIBOR (not less than 0%).
The borrowings (excluding capitalised loan issue cost) are
repayable as follows:
31 March 31 March
2023 2022
EURm EURm
-------------------------------------- -------- --------
On demand or within one year 246.6 20.4
In the second year 28.5 246.7
In the third to tenth years inclusive 700.0 728.5
-------------------------------------- -------- --------
Total 975.1 995.6
-------------------------------------- -------- --------
The Group has pledged 15 (2022: 15) investment properties to
secure several separate interest-bearing debt facilities granted to
the Group. The 15 (2022: 15) properties had a combined valuation of
EUR510.7m as at year end (2022: EUR504.7m).
Berlin Hyp AG
On 20 October 2016, the Group concluded an agreement with Berlin
Hyp AG to refinance and extend a facility which had an outstanding
balance of EUR39.2m on 30 September 2016. The facility totals
EUR70.0m and was scheduled to terminate on 29 October 2023.
Amortisation was 2.50% per annum with the remainder due at
maturity. The facility was charged with an all-in fixed interest
rate of 1.48% for the full term of the loan. The facility was
secured over six property assets. The loan was subject to various
covenants with which the Group had complied. On 13 September 2019,
the facility was incorporated into the agreement as detailed below.
As a result, the maturity date of the loan was extended to 31
October 2023 with all other conditions remaining unchanged.
On 13 September 2019, the Group agreed to a facility agreement
with Berlin Hyp AG for EUR115.4m. The loan terminates on 31 October
2023. Amortisation is 1.25% per annum with the remainder due in the
fourth year. The loan facility is charged at a fixed interest rate
of 0.90%. This facility is secured over nine property assets. 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 EUR170.0m. The new facility is a separate financial
instrument to the existing facility and will come into effect on 1
November 2023 with a term of seven years and a fixed interest rate
of 4.26%.
Saarbrücken Sparkasse
On 28 March 2018, the Group agreed to a facility agreement with
Saarbrücken Sparkasse for EUR18.0m. The loan terminates on 28
February 2025. Amortisation is 4.00% per annum with the remainder
due in one instalment on the final maturity date. The facility is
charged with an all-in fixed interest rate of 1.53% for the full
term of the loan. The facility is secured over one property asset
and is subject to various covenants with which the Group has
complied. No changes to the terms of the facility have occurred
during the twelve month period ended 31 March 2023.
Deutsche Pfandbriefbank AG
On 19 January 2019, the Group agreed to a facility agreement
with Deutsche Pfandbriefbank AG for EUR56.0m. Tranche 1, totalling
EUR21.6m, has been hedged at a rate of 1.40% until 31 December 2023
by way of an interest rate swap. A first drawdown of tranche 3
totalling EUR0.5m was charged at a fixed interest rate of 1.20%. On
3 April 2019, tranche 2 was drawn down, totalling EUR14.8m, and has
been hedged at a rate of 1.25% until 31 December 2023 by way of an
interest rate swap. On 28 June 2019, tranche 3 has been drawn down,
totalling EUR19.1m. Tranche 3 has been hedged at a rate of 0.91%
until 31 December 2023 by way of an interest rate swap. The
facility is secured over five property assets and is subject to
various covenants with which the Group has complied.
On 19 February 2020, the Group agreed to extend tranche 3 of its
existing facility by EUR6.5m. The loan is coterminous with the
existing facility maturing in December 2023. The loan has been
treated as a new loan and is charged with a floating interest rate
of 1.20% plus three month EURIBOR (not less than 0%). Amortisation
is 2.00% per annum with the remainder due in one instalment on the
final maturity date. No changes to the terms of the facility have
occurred during the twelve month period ended 31 March 2023.
Schuldschein
On 2 December 2019, the Group agreed to new loan facilities in
the form of unsecured Schuldschein for EUR20.0m. On 25 February
2020, the Group agreed new loan facilities in the form of unsecured
Schuldschein for EUR30.0m. In total the unsecured facility amounts
to EUR50.0m spread over five tranches and is charged at a blended
interest rate of 1.60% and average maturity of 2.6 years with no
amortisation. The Schuldschein is subject to various covenants with
which the Group has complied. The first and second tranches
totalling EUR15.0m were repaid during the twelve month period ended
31 March 2023.
Corporate bond I
On 22 June 2021, the Group raised its inaugural corporate bond
for EUR400.0m. The bond, which is listed at the Luxembourg Stock
Exchange, has a term of five years and an interest rate of 1.125%
due annually on its anniversary date, with the principal balance
coming due on 22 June 2026. The corporate bond is subject to
various covenants with which the Group has complied. No changes to
the terms of the facility have occurred during the twelve month
period ended 31 March 2023.
Corporate bond II
On 24 November 2021, the Group issued its second corporate bond
for EUR300.0m. The bond, which is listed at the Luxembourg Stock
Exchange, has a term of seven years and an interest rate of 1.75%
due annually on its anniversary date, with the principal balance
coming due on 24 November 2028. The corporate bond is subject to
various covenants with which the Group has complied. No changes to
the terms of the facility have occurred during the twelve month
period ended 31 March 2023.
Group debt covenants
A summary of the Group's debt covenants is set out below:
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------------------- -------- --------
Carrying amount of interest-bearing loans and borrowings 964.4 981.5
Unamortised borrowing costs 10.7 14.1
Book value of owned investment properties(1) 2,107.3 2,088.7
--------------------------------------------------------- -------- --------
Gross loan to value ratio 46.3% 47.7%
--------------------------------------------------------- -------- --------
(1) Includes assets held for sale.
The Group's loans are subject to various covenants, which
include interest cover ratio, loan to value, debt service cover,
occupancy, etc. as stipulated in the loan agreements.
During the year, the Group did not breach any of its loan
covenants, nor did it default on any of its obligations under its
loan agreements and the Group has a sufficient level of headroom as
at year end.
Refer to note 2(d) where the Group discloses forecast covenant
compliance with regard to management's going concern
assessment.
EPRA loan to value ("LTV")
Proportionate
consolidation
--------------
Investment
Group in associates Total
31 March 2023 EURm EURm EURm
-------------------------------------- ------- -------------- -------
Interest-bearing loans and borrowings
(1) 264.4 52.1 316.5
Corporate bonds 700.0 - 700.0
Net payables 71.0 4.5 75.5
Cash and cash equivalents (124.3) (8.6) (132.9)
-------------------------------------- ------- -------------- -------
Net debt (a) 911.1 48.0 959.1
-------------------------------------- ------- -------------- -------
Investment properties 2,123.0 124.2 2,247.2
Assets held for sale 8.8 - 8.8
Plant and equipment 7.2 - 7.2
Intangible assets 4.1 - 4.1
Loan to associates 44.3 - 44.3
-------------------------------------- ------- -------------- -------
Total property value (b) 2,187.4 124.2 2,311.6
-------------------------------------- ------- -------------- -------
EPRA LTV (a/b) 41.7% 38.6% 41.5%
-------------------------------------- ------- -------------- -------
Proportionate
consolidation
--------------
Investment
Group in associates Total
31 March 2022 EURm EURm EURm
-------------------------------------- ------- -------------- -------
Interest-bearing loans and borrowings
(1) 281.5 51.9 333.4
Corporate bonds 700.0 - 700.0
Net payables 70.7 3.1 73.8
Cash and cash equivalents (151.0) (6.2) (157.2)
-------------------------------------- ------- -------------- -------
Net debt (a) 901.2 48.8 950.0
-------------------------------------- ------- -------------- -------
Investment properties 2,100.0 122.4 2,222.4
Assets held for sale 13.8 - 13.8
Plant and equipment 5.5 - 5.5
Intangible assets 4.3 - 4.3
Loan to associates 44.2 - 44.2
-------------------------------------- ------- -------------- -------
Total property value (b) 2,167.8 122.4 2,290.2
-------------------------------------- ------- -------------- -------
EPRA LTV (a/b) 41.6% 39.9% 41.5%
-------------------------------------- ------- -------------- -------
(1) Excludes corporate bonds as shown as a separate line.
25. Financial risk management objectives and policies
The Group's principal financial liabilities comprise bank loans,
derivative financial instruments and trade payables. The main
purpose of these financial instruments is to raise finance for the
Group's operations. The Group has various financial assets, such as
trade receivables and cash, which arise directly from its
operations.
The main risks arising from the Group's financial instruments
are credit risk, liquidity risk, market risk, currency risk and
interest rate risk.
Credit risk
Credit risk arises when a failure by counterparties to discharge
their obligations could reduce the amount of future cash inflows
from financial assets on hand at the reporting date. The credit
risk on liquid funds is limited because the counterparties are
banks with high credit ratings assigned by international credit
rating agencies. The risk management policies employed by the Group
to manage these risks are discussed below.
In the event of a default by an occupational tenant, the Group
will suffer a rental shortfall and incur additional costs,
including expenses incurred to try and recover the defaulted
amounts and legal expenses in maintaining, insuring and marketing
the property until it is re-let. During the year, the Group
monitored the tenants in order to anticipate and minimise the
impact of defaults by occupational tenants, as well as to ensure
that the Group has a diversified tenant base. The credit risk on
tenants is also addressed through the performance of credit checks,
collection of deposits and regular communication with the
tenants.
Included in loans to associates are loans provided to associate
entities from Group entities. During the year the Group assessed
credit risk relating to loans to associates by reviewing business
plans and monitoring cash collection rates and the operational
performance of each associate in order to anticipate and minimise
the impact of any impairment.
Included in other receivables are lease incentives. During the
year the Group monitored tenants in order to anticipate and
minimise the impact of defaults and move-outs from tenants which
received lease incentives.
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the
reporting date was:
31 March 31 March
2023 2022
EURm EURm
--------------------------------- -------- --------
Net trade receivables 13.7 11.1
Other receivables 13.6 8.8
Loans to associates 44.3 44.2
Derivative financial instruments 1.3 0.3
Cash and cash equivalents 124.3 151.0
--------------------------------- -------- --------
Total 197.2 215.4
--------------------------------- -------- --------
Included in other receivables are guarantees and deposits in the
amount of EUR4.1m (2022: EUR4.1m).
The ageing of trade receivables at the statement of financial
position date was:
31 March 2023 31 March 2022
----------------- -----------------
Gross Impairment Gross Impairment
EURm EURm EURm EURm
----------------------- ----- ---------- ----- ----------
0-30 days 13.9 (4.3) 12.1 (2.7)
31-120 days (past due) 1.3 (0.5) 1.3 (0.4)
More than 120 days 7.2 (3.9) 5.4 (4.6)
----------------------- ----- ---------- ----- ----------
Total 22.4 (8.7) 18.8 (7.7)
----------------------- ----- ---------- ----- ----------
The movement in the allowance for impairment in respect of trade
receivables during the year was as follows:
31 March 31 March
2023 2022
EURm EURm
---------------------------------------- -------- --------
Balance as at the beginning of the year (7.7) (5.4)
Expected credit loss recognised (8.7) (7.7)
Expected credit loss reversed 7.7 5.4
---------------------------------------- -------- --------
Balance as at year end (8.7) (7.7)
---------------------------------------- -------- --------
The allowance account for trade receivables is used to record
impairment losses unless the Group believes that no recovery of the
amount owing is possible; at that point the amounts considered
irrecoverable are written off against the trade receivables
directly.
Most trade receivables are generally due one month in advance.
The exception is service charge balancing billing, which is due ten
days after it has been invoiced. Included in the Group's trade
receivables are debtors with carrying amounts of EUR13.7m (2022:
EUR11.1m) that are past due at the reporting date for which the
Group has not provided significant impairment as there has not been
a significant change in credit quality and the amounts are still
considered recoverable.
No significant impairment has been recognised relating to
non-current receivables in the period due to unchanged credit
quality and the amounts are still considered recoverable.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities does not match. An unmatched position
potentially enhances profitability but can also increase the risk
of losses. The Group has procedures with the objective of
minimising such losses, such as maintaining sufficient cash and
other highly liquid current assets and having available an adequate
amount of committed credit facilities. The Group prepares cash flow
forecasts and continually monitors its ongoing commitments compared
to available cash. Cash and cash equivalents are placed with
financial institutions on a short-term basis which allows immediate
access. This reflects the Group's desire to maintain a high level
of liquidity in order to meet any unexpected liabilities that may
arise due to the current financial position. Similarly, accounts
receivable are due either in advance (e.g. rents and recharges) or
within ten days (e.g. service charge reconciliations), further
bolstering the Group's management of liquidity risk.
The table below summarises the maturity profile of the Group's
financial liabilities, based on contractual undiscounted
payments:
Derivative Trade
Interest-bearing financial and other Lease
loans instruments payables liabilities Total
31 March 2023 EURm EURm EURm EURm EURm
----------------------------- ---------------- ------------ ---------- ------------ ---------
Undiscounted amounts payable
in:
6 months or less (28.5) (0.8) (59.0) (1.6) (89.9)
6 months-1 year (229.4) (0.4) - (1.7) (231.5)
1-2 years (38.8) - - (3.3) (42.1)
2-5 years (421.3) - - (10.0) (431.3)
5-10+ years (303.4) - - (94.7) (398.1)
----------------------------- ---------------- ------------ ---------- ------------ ---------
(1,021.4) (1.2) (59.0) (111.3) (1,192.9)
Interest 46.3 1.2 - 71.7 119.2
----------------------------- ---------------- ------------ ---------- ------------ ---------
(975.1) - (59.0) (39.6) (1,073.7)
----------------------------- ---------------- ------------ ---------- ------------ ---------
Derivative Trade
Interest-bearing financial and other Lease
loans instruments payables liabilities Total
31 March 2022 EURm EURm EURm EURm EURm
----------------------------- ---------------- ------------ ---------- ------------ ---------
Undiscounted amounts payable
in:
6 months or less (9.5) (0.1) (56.3) (1.3) (67.2)
6 months-1 year (24.5) (0.1) - (0.8) (25.4)
1-2 years (258.8) (0.2) - (2.9) (261.9)
2-5 years (454.7) (0.1) - (9.0) (463.8)
5-10+ years (308.7) - - (92.4) (401.1)
----------------------------- ---------------- ------------ ---------- ------------ ---------
(1,056.2) (0.5) (56.3) (106.4) (1,219.4)
Interest 60.6 0.5 - 67.7 128.8
----------------------------- ---------------- ------------ ---------- ------------ ---------
(995.6) - (56.3) (38.7) (1,090.6)
----------------------------- ---------------- ------------ ---------- ------------ ---------
Currency risk
The Group's exposure to currency risk relates primarily to the
Group's exposure to the GBP and to a lesser extent the South
African rand. This exposure is driven primarily by the acquisition
of the BizSpace Group as detailed in note 4. In addition thereto,
the Group has dividend obligations in both the GBP and South
African rand. The foreign currency risk in relation to the GBP is
mitigated as a result of the BizSpace Group generating GBP
denominated income in order to fund its obligations when they come
due and, in addition, the Group's GBP dividend obligations. The
Group holds small deposits in South African rand for the purposes
of working capital and dividend obligations.
Interest rate risk
The Group's exposure to interest rate risk relates primarily to
the Group's long-term floating rate debt obligations. The Group's
policy is to mitigate interest rate risk by ensuring that a minimum
of 80% of its total borrowing is at fixed or capped interest rates
by taking out fixed rate loans or derivative financial instruments
to hedge interest rate exposure, or interest rate caps.
A change in interest will only have an impact on loans fixed by
a swap. An increase of 100 bps in interest rate would result in a
decreased post tax profit in the consolidated income statement of
EUR0.04m (2022: EUR0.3m) (excluding the movement on derivative
financial instruments) and a decrease of 100 bps in interest rate
would result in an increased post tax profit in the consolidated
income statement of EUR0.04m (2022: EUR0.3m) (excluding the
movement on derivative financial instruments).
The following table sets out the carrying amount, by maturity,
of the Group's financial instruments that are exposed to interest
rate risk:
Within
1 year 1-2 years 2-3 years 3-4 years 4+ years Total
31 March 2023 EURm EURm EURm EURm EURm EURm
--------------------------- ------- --------- --------- --------- -------- -----
Deutsche Pfandbriefbank AG (6.2) - - - - (6.2)
Schuldschein - (5.0) - - - (5.0)
--------------------------- ------- --------- --------- --------- -------- -----
Within
1 year 1-2 years 2-3 years 3-4 years 4+ years Total
31 March 2022 EURm EURm EURm EURm EURm EURm
--------------------------- ------- --------- --------- --------- -------- ------
Deutsche Pfandbriefbank AG (0.1) (6.2) - - - (6.3)
Schuldschein (15.0) - (5.0) - - (20.0)
--------------------------- ------- --------- --------- --------- -------- ------
The other financial instruments of the Group that are not
included in the above tables have fixed interest rates and are
therefore not subject to interest rate risk.
Market risk
The Group's activities are within the real estate market,
exposing it to very specific industry risks.
The yields available from investments in real estate depend
primarily on the amount of revenue earned and capital appreciation
generated by the relevant properties, as well as expenses incurred.
If properties do not generate sufficient revenues to meet operating
expenses, including debt service and capital expenditure, the yield
is affected, and it can have an impact on the decision of our
investors and banks. Revenues from properties may be adversely
affected by: the general economic climate; local conditions, such
as an oversupply of properties, or a reduction in demand for
properties, in the market in which the Group operates; the
attractiveness of the properties to the tenants; the quality of the
management; competition from other available properties; and
increased operating costs.
In addition, the Group's profit would be adversely affected if a
significant number of tenants were unable to pay rent or its
properties could not be rented on favourable terms. Certain
significant expenditures associated with each equity investment in
real estate (such as external financing costs, real estate taxes
and maintenance costs) are generally not reduced when circumstances
cause a reduction in revenue from properties. By diversifying in
product, risk categories and tenants, the Group expects to lower
the risk profile of the portfolio.
Capital management
For the purpose of the Group's capital management, capital
includes all equity reserves attributable to the equity holders of
the parent. The Group seeks to enhance shareholder value both by
investing in the business so as to improve the return on investment
and by managing the capital structure. The Group manages its
capital structure and in doing so takes into consideration the
impact of changes in economic conditions. The Group assesses its
capital management through the total accounting shareholder return
which was 4.8% as at 31 March 2023 (2022: 20.0%) and the net loan
to value which was 41.6% as at 31 March 2023 (2022: 41.6%).
To maintain or adjust the capital structure, the Group may
undertake a number of actions including but not limited to share
issuances and changes to its distribution policy to shareholders.
The transfer of amounts recorded in share capital to other
distributable reserves is made in accordance with The Companies
(Guernsey) Law, 2008. The Group's distribution policy takes into
account the concept of solvency under The Companies (Guernsey) Law,
2008. The Group is not subject to externally imposed capital
requirements other than those related to the covenants of the bank
loan facilities. There have been no breaches of the financial
covenants of any interest-bearing loans and borrowings in the
current year (note 2d).
26. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts
and fair values of all of the Group's financial instruments that
are carried in the financial statements (excluding assets held for
sale and liabilities directly associated with assets held for
sale):
31 March 2023 31 March 2022
----------- ---------------- ----------------
Fair value Carrying Fair Carrying Fair
hierarchy amount value amount value
level EURm EURm EURm EURm
--------------------------------- ----------- -------- ------ -------- ------
Financial assets
Cash and cash equivalents 124.3 124.3 151.0 151.0
Trade and other receivables(1) 27.3 27.3 19.9 19.9
Loans to associates 2 44.3 44.3 44.2 44.2
Derivative financial instruments 2 1.3 1.3 0.3 0.3
--------------------------------- ----------- -------- ------ -------- ------
Financial liabilities
Trade and other payables 59.0 59.0 56.3 56.3
Derivative financial instruments 2 - - - -
Interest-bearing loans and
borrowings(2)
Floating rate borrowings 2 11.2 11.2 26.3 26.3
Floating rate borrowings
- hedged(3) 2 51.1 51.1 52.2 52.2
Floating rate borrowings
- capped 2 - - - -
Fixed rate borrowings 2 912.8 813.6 917.1 939.3
--------------------------------- ----------- -------- ------ -------- ------
All amounts in the table above are carried at amortised cost
except for derivative financial instruments which are held at fair
value.
(1) This is made up of net trade receivables, other receivables
(excluding lease incentives) and guarantees and deposits.
(2) Excludes loan issue costs.
(3) The Group holds interest rate swap contracts designed to
manage the interest rate and liquidity risks of expected cash flows
of its borrowings with the variable rate facilities with Deutsche
Pfandbriefbank AG. Please refer to note 24 for details of swap
contracts.
Fair value hierarchy
For financial assets or liabilities measured at amortised cost
and whose carrying value is a reasonable approximation to fair
value there is no requirement to analyse their value in the fair
value hierarchy.
The below analyses financial instruments measured at fair value
into a fair value hierarchy based on the valuation technique used
to determine fair value:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group holds interest rate swap contracts which are reset on
a quarterly basis. The fair value of interest rate swaps is based
on broker quotes. Those quotes are tested for reasonableness by
discounting estimated future cash flows based on the terms and
maturity of each contract and using market interest rates for a
similar instrument at the measurement date. The average interest
rate is based on the outstanding balances at the end of the
reporting period. The interest rate swap is measured at fair value
with changes recognised in profit or loss.
The fair values of the loans and borrowings have been calculated
based on a discounted cash flow model using the prevailing market
rates of interest.
27. Issued share capital
Share
Number capital
Authorised of shares EURm
------------------------------------- ---------- --------
Ordinary shares of no par value Unlimited -
------------------------------------- ---------- --------
As at 31 March 2023 and 31 March 2022 Unlimited -
------------------------------------- ---------- --------
Share
Number capital
Issued and fully paid of shares EURm
------------------------------------------------- ------------- --------
As at 31 March 2021 1,049,132,259 -
Issued ordinary shares 119,344,125 167.4
Transfer of share capital to other distributable
reserves - (167.4)
Shares issued to Employee Benefit Trust (3,557,745) -
Shares allocated by the Employee Benefit Trust 1,962,045 -
------------------------------------------------- ------------- --------
As at 31 March 2022 1,166,880,684 -
Issued ordinary shares 3,702,993 1.4
Transfer of share capital to other distributable
reserves - (1.4)
Shares issued to Employee Benefit Trust (2,500,000) -
Shares allocated by the Employee Benefit Trust 287,545 -
------------------------------------------------- ------------- --------
As at 31 March 2023 1,168,371,222 -
------------------------------------------------- ------------- --------
Holders of the ordinary shares are entitled to receive dividends
and other distributions and to attend and vote at any general
meeting. Shares held in treasury are not entitled to receive
dividends or to vote at general meetings.
Pursuant to a scrip dividend offering on 13 June 2022, the
Company issued 1,271,279 ordinary shares at an issue price of
GBP0.97384 resulting in the Company's overall issued share capital
being 1,175,052,364 ordinary shares.
In addition, during the year the Company issued 2,431,714 shares
in relation to the exercise of the LTIP 2018 (June 2019 grant) as
per note 9. These shares were issued at nil-cost, and the fair
value of these shares recorded in the share capital account has
been transferred back to the other distributable reserves.
Treasury shares held by the Employee Benefit Trust are disclosed
as own shares held. During the year 2,500,000 shares were acquired
and 287,545 were allocated by the Employee Benefit Trust. A total
of 7,492,763 own shares purchased at an average share price of
EUR1.1185 are held by the Employee Benefit Trust (2022: 5,280,308
own shares purchased at an average share price of EUR1.1882). The
total number of shares with voting rights was 1,175,863,985 (2022:
1,172,160,992). No votes are cast in respect of the shares held in
the Employee Benefit Trust in connection with the Company's share
plans and dividends paid and payable are subject to a standing
waiver.
All shares issued in the year were issued under general
authority. No shares were bought back in the year (2022: none) and
there are no Treasury Shares held directly by the Company at the
year end (2022: none).
28. Other reserves
Other distributable reserve
This reserve comprises of amounts in relation to scrip dividend
transfers from share capital, share-based payment transactions and
share buy-backs. The balance of EUR516.4m in total at year end
(2022: EUR570.4m) is considered distributable.
Foreign currency translation reserve
The Group holds a foreign currency translation reserve which
relates to foreign currency translation effect during the course of
the business with the UK segment.
The following table illustrates the movement in the foreign
currency translation reserve:
31 March 31 March
2023 2022
EURm EURm
---------------------------------------- -------- --------
Balance as at the beginning of the year (1.7) -
Foreign currency translation (17.2) (1.7)
---------------------------------------- -------- --------
Balance as at year end (18.9) (1.7)
---------------------------------------- -------- --------
The movement in the year of EUR17.2m deficit is a result of a
declining GBP rate which is lower at year end compared with 31
March 2022 (2022: EUR1.7m deficit).
29. Notes to cash flow
Changes in liabilities arising from financing activities
Reconciliation of movements of liabilities arising from
financing activities:
Changes
31 March Acquisition in Other 31 March
2022 Cash flows New leases of a subsidiary fair values (1) 2023
EURm EURm EURm EURm EURm EURm EURm
----------------------- -------- ---------- ---------- ---------------- ------------ ----- --------
Interest-bearing loans
and borrowings 981.5 (20.4) - - - 3.3 964.4
Lease liabilities 38.7 (2.3) 2.8 - - 0.4 39.6
Derivative financial
instruments (0.3) - - - (0.9) (0.1) (1.3)
----------------------- -------- ---------- ---------- ---------------- ------------ ----- --------
Total 1,019.9 (22.7) 2.8 - (0.9) 3.60 1,002.7
----------------------- -------- ---------- ---------- ---------------- ------------ ----- --------
Changes
31 March Acquisition in Other 31 March
2021 Cash flows New leases of a subsidiary fair values (1) 2022
EURm EURm EURm EURm EURm EURm EURm
----------------------- -------- ---------- ---------- ---------------- ------------ ------ --------
Interest-bearing loans
and borrowings 468.1 523.5(2) - - - (10.1) 981.5
Lease liabilities 15.0 (6.4) 18.4 12.2 - (0.5) 38.7
Derivative financial
instruments 1.2 (0.5) - - (1.0) - (0.3)
----------------------- -------- ---------- ---------- ---------------- ------------ ------ --------
Total 484.3 516.6 18.4 12.2 (1.0) (10.6) 1,019.9
----------------------- -------- ---------- ---------- ---------------- ------------ ------ --------
(1) Changes in the capitalised finance charges on all loans,
foreign exchange differences and accretion of interest on lease
liabilities.
(2) The cash flows relating to the interest-bearing loans and
borrowings of EUR523.5m in the year ended 31 March 2022 includes
the EUR153.1m repayment of the AgFe external loan facility as part
of the acquisition of Helix Investments Limited on 15 November
2021
30. Dividends
On 7 June 2021, the Company announced a dividend of 1.98c per
share, with a record date of 9 July 2021 for the UK and South
African ("SA") shareholders and payable on 19 August 2021. On the
record date, 1,054,755,527 shares were in issue. Since there were
no shares held in treasury, 1,054,755,527 shares (including shares
held by the Employee Benefit Trust) were entitled to participate in
the dividend. Holders of 476,206,726 shares elected to receive the
dividend in ordinary shares under the scrip dividend alternative,
representing a dividend of EUR9.3m (EUR9.2m as at settlement date)
while holders of 578,548,801 shares opted for a cash dividend with
a value of EUR11.5m. The Company's Employee Benefit Trust waived
its rights to the dividend, reducing the cash payable to EUR11.4m
(EUR11.4m as at settlement date). The total dividend was EUR20.8m
(EUR20.6m as at settlement date).
On 8 November 2021, the Company announced a dividend of 2.04c
per share, with a record date of 17 December 2021 for the UK and SA
shareholders and payable on 20 January 2022. On the record date,
1,169,465,925 shares were in issue. Since there were no shares held
in treasury, 1,169,465,925 shares (including shares held by the
Employee Benefit Trust) were entitled to participate in the
dividend. Holders of 216,062,440 shares elected to receive the
dividend in ordinary shares under the scrip dividend alternative,
representing a dividend of EUR4.4m (EUR4.5m as at settlement date)
while holders of 953,403,485 shares opted for a cash dividend with
a value of EUR19.4m. The Company's Employee Benefit Trust waived
its rights to the dividend, reducing the cash payable to EUR19.4m
(EUR19.4m as at settlement date). The total dividend was EUR23.8m
(EUR23.9m as at settlement date).
On 13 June 2022, the Company announced a dividend of 2.37c per
share, with a record date of 8 July 2022 for the UK and SA
shareholders and payable on 18 August 2022. On the record date,
1,172,160,992 shares were in issue. Since there were no shares held
in treasury, 1,172,160,992 shares (including shares held by the
Employee Benefit Trust) were entitled to participate in the
dividend. Holders of 61,453,275 shares elected to receive the
dividend in ordinary shares under the scrip dividend alternative,
representing a dividend of EUR1.4m (EUR1.4m as at settlement date)
while holders of 1,110,707,717 shares opted for a cash dividend
with a value of EUR26.3m. The Company's Employee Benefit Trust
waived its rights to the dividend, reducing the cash payable to
EUR26.2m (EUR26.3m as at settlement date). The total dividend was
EUR27.7m (EUR27.7m as at settlement date).
On 21 November 2022, the Company announced a dividend of 2.70c
per share, with a record date of 9 December 2022 for the UK and SA
shareholders and payable on 19 January 2023. On the record date,
1,175,863,985 shares were in issue. Since there were no shares held
in treasury, 1,175,863,985 shares (including shares held by the
Employee Benefit Trust) were entitled to participate in the
dividend. The Company's Employee Benefit Trust waived its rights to
the dividend, reducing the total dividend (payable in cash) from
EUR31.7m to EUR31.5m (EUR31.5m as at settlement date).
The Group's profit attributable to the equity holders of the
Company for the year was EUR77.2m (2022: EUR147.9m). The Board has
authorised a dividend in respect of the second half of the
financial year ended 31 March 2023 of 2.98c per share representing
65% of FFO, an increase of 25.7% on the equivalent dividend last
year, which represented 65% of FFO(1) . The total dividend for the
year is 5.68c, an increase of 28.8% on the 4.41c total dividend for
the year ended 31 March 2022.
It is expected that, for the dividend authorised relating to the
six month period ended 31 March 2023, the ex-dividend date will be
12 July 2023 for shareholders on the SA register and 13 July 2023
for shareholders on the UK register. It is further expected that
for shareholders on both registers the record date will be 14 July
2023 and the dividend will be paid on 17 August 2023. A detailed
dividend announcement was made on 5 June 2023.
The dividend paid per the statement of changes in equity is the
value of the cash dividend.
(1) Adjusted profit before tax adjusted for foreign exchange
effects, depreciation and amortisation (excluding depreciation
relating to IFRS 16), amortisation of financing fees, adjustments
in respect of IFRS 16 and current tax receivable/incurred.
The dividend per share was calculated as follows:
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
------------------------------------------------------ ---------- ----------
Reported profit before tax 87.0 168.9
Adjustments for:
Loss/(gain) on revaluation of investment properties 9.8 (140.9)
Deficit on revaluation relating to leased investment
properties (1.5) (5.6)
(Gain)/loss of disposals of properties (4.7) 0.6
Recoveries from prior disposals of subsidiaries - (0.1)
Loss/(gain) on revaluation of investment property
from associates and related tax 0.1 (4.8)
Other adjusting items(1) 6.2 19.1
Goodwill impairment - 40.9
Change in fair value of financial derivatives (0.9) (1.0)
------------------------------------------------------ ---------- ----------
Adjusted profit before tax 96.0 77.1
Adjustments for:
Foreign exchange effects(2) 0.2 (1.9)
Depreciation and amortisation (excluding depreciation
relating to IFRS 16) 3.4 2.4
Amortisation of financing fees 3.3 2.6
Adjustment in respect of IFRS 16 2.2 0.5
Current taxes incurred (see note 11) (3.0) (6.1)
Funds from operations, year ended 31 March 102.1 74.6
------------------------------------------------------ ---------- ----------
Funds from operations, six months ended 30 September 48.5 33.0
------------------------------------------------------ ---------- ----------
Funds from operations, six months ended 31 March 53.6 41.6
------------------------------------------------------ ---------- ----------
Dividend pool, six months ended 30 September 31.5 21.6
------------------------------------------------------ ---------- ----------
Dividend pool, six months ended 31 March(3) 34.8 27.6
------------------------------------------------------ ---------- ----------
Dividend per share, six months ended 30 September 2.70c 2.04c
------------------------------------------------------ ---------- ----------
Dividend per share, six months ended 31 March 2.98c 2.37c
------------------------------------------------------ ---------- ----------
(1) Includes the effect of exceptional items, refinancing
activity and share awards. See note 12 for details.
(2) Management decided to exclude foreign exchange effects from
the funds from operations calculation of EUR(0.2)m (2022:
EUR1.9m).
(3) Calculated as 65% of FFO of 4.59c per share (2022: 3.64c per
share using 65% of FFO) based on average number of shares
outstanding of 1,168,134,871 (2022: 1,141,807,790).
For more information on adjusted profit before tax and funds
from operations, refer to Annex 1.
Calculations contained in this table are subject to rounding
differences.
31. Related parties
Related parties are defined as those persons and companies that
control the Group, or that are controlled, jointly controlled or
subject to significant influence by the Group.
Key management personnel
Fees paid to people considered to be key management personnel
(the Senior Management Team) of the Group during the year
include:
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
----------------------------- ---------- ----------
Directors' fees 0.5 0.5
Salary and employee benefits 5.0 4.4
Share-based payments 3.0 2.6
----------------------------- ---------- ----------
Total 8.5 7.5
----------------------------- ---------- ----------
Included within salary and employee benefits are pension
contributions amounting to EUR0.2m (2022: EUR0.2m).
Directors' emoluments have been disclosed in the Annual report
in the Remuneration report under the 'Single figure table' and in
the additional disclosures in respect of the single figure table
section on pages 122 to 123.
Associates
The following balances and transactions with associates exist as
at the reporting date:
31 March 31 March
2023 2022
Consolidated statement of financial position EURm EURm
--------------------------------------------- -------- --------
Loans to associates 44.3 44.2
Trade and other receivables 4.0 2.6
--------------------------------------------- -------- --------
Total 48.3 46.8
--------------------------------------------- -------- --------
Trade and other receivables relate to amounts owed from the
services supplied to the associates and are due to be settled in
the normal course of business.
As a result of unchanged credit quality, no material expected
credit losses have been recognised in the year.
Year ended Year ended
31 March 31 March
2023 2022
Consolidated income statement EURm EURm
------------------------------ ---------- ----------
Services supplied 15.1 13.1
Interest income 2.2 2.9
------------------------------ ---------- ----------
Total 17.3 16.0
------------------------------ ---------- ----------
Services provided to associates primarily relate to the
provision of property and asset management services. A performance
fee arrangement is in place between the associates and the Group.
The performance fee was EURnil during the year (2022: EURnil).
32. Capital and other commitments
As at year end, the Group had contracted capital expenditure for
development and enhancements on existing properties of EUR14.9m
(2022: EUR7.8m) and capital commitments amounting to EURnil (2022:
in relation to the notarised asset in Düsseldorf of EUR35.3m).
The above noted were committed but not yet provided for in the
financial statements.
33. Operating lease arrangements
Group as lessor
All properties leased by the Group are under operating leases
and the future minimum lease payments receivable under non --
cancellable leases are as follows:
31 March 31 March
2023 2022
EURm EURm
------------------ -------- --------
Less than 1 year 125.3 118.1
1-2 years 98.2 96.1
2-3 years 76.6 75.7
3-4 years 58.7 57.7
4-5 years 36.7 35.6
More than 5 years 68.1 68.6
------------------ -------- --------
Total 463.6 451.8
------------------ -------- --------
The Group leases out its investment properties under operating
leases. Most operating leases are for terms of one to ten
years.
34. List of subsidiary undertakings and investments in
associates
The Group consists of 122 subsidiary companies (2022: 122
subsidiary companies). All subsidiaries are consolidated in full in
accordance with IFRS. The principal activity of the subsidiaries is
the investment in, and development of, commercial property to
provide conventional and flexible workspace in Germany and the
UK.
Ownership Ownership
at at
31 March 31 March
Country 2023 2022
Company name of incorporation % %
--------------------------------------------------------- ------------------ ---------- ---------
BizSpace Acquisitions Ltd Jersey 100.00 100.00
BizSpace Developments Ltd UK 100.00 100.00
BizSpace Green Holdings Ltd UK 100.00 100.00
BizSpace Green Operations Ltd UK 100.00 100.00
BizSpace Holdings Ltd UK 100.00 100.00
BizSpace II Ltd UK 100.00 100.00
BizSpace Ltd UK 100.00 100.00
BizSpace Property 100 Ltd Jersey 100.00 100.00
BizSpace Property I Ltd UK 100.00 100.00
BizSpace Property SSP Ltd UK 100.00 100.00
Curris Facilities & Utilities Management
GmbH Germany 100.00 100.00
DDS Aspen B.V. Netherlands 100.00 100.00
DDS Bagnut B.V. Netherlands 100.00 100.00
DDS Business Centres B.V. Netherlands 100.00 100.00
DDS Coconut B.V. Netherlands 100.00 100.00
DDS Conferencing & Catering GmbH Germany 100.00 100.00
DDS Elm B.V. Netherlands 100.00 100.00
DDS Fir B.V. Netherlands 100.00 100.00
DDS Hawthorn B.V. Netherlands 100.00 100.00
DDS Hazel B.V. Netherlands 100.00 100.00
DDS Hyacinth B.V. Netherlands 100.00 100.00
DDS Lark B.V. Netherlands 100.00 100.00
DDS Mulberry B.V. Netherlands 100.00 100.00
DDS Rose B.V. Netherlands 100.00 100.00
DDS Walnut B.V. Netherlands 100.00 100.00
DDS Yew B.V. Netherlands 100.00 100.00
Helix FinCo Ltd Jersey 100.00 100.00
Helix Investments Ltd(1) Jersey 100.00 100.00
Helix Property Ltd Jersey 100.00 100.00
LB(2) Catering and Services GmbH Germany 100.00 100.00
M25 Business Centres Ltd UK 100.00 100.00
Marba Apple B.V. Netherlands 100.00 100.00
Marba Bamboo B.V. Netherlands 100.00 100.00
Marba Cherry B.V. Netherlands 100.00 100.00
Marba Daffodil B.V. Netherlands 100.00 100.00
Marba Holland B.V.(1) Netherlands 100.00 100.00
Marba Lavender B.V. Netherlands 100.00 100.00
Marba Mango B.V. Netherlands 100.00 100.00
Marba Olive B.V. Netherlands 100.00 100.00
Marba Sunflower B.V. Netherlands 100.00 100.00
Marba Violin B.V. Netherlands 100.00 100.00
Marba Willstätt B.V. Netherlands 100.00 100.00
SFG NOVA Construction and Services GmbH Germany 100.00 100.00
Sirius Alder B.V. Netherlands 100.00 100.00
Sirius Aloe GmbH & Co. KG Germany 100.00 100.00
Sirius Ash B.V. Netherlands 100.00 100.00
Sirius Aster GmbH & Co. KG Germany 100.00 100.00
Sirius Beech B.V. Netherlands 100.00 100.00
Sirius Birch GmbH & Co. KG Germany 100.00 100.00
Sirius Coöperatief B.A.(1) Netherlands 100.00 100.00
Sirius Dahlia GmbH & Co. KG Germany 100.00 100.00
Sirius Facilities (UK) Ltd(1) UK 100.00 100.00
Sirius Facilities GmbH Germany 100.00 100.00
Sirius Finance (Cyprus) Ltd.(1) Cyprus 100.00 100.00
Sirius Four B.V. Netherlands 100.00 100.00
Sirius Frankfurt Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Frankfurt Zweite GmbH & Co. KG Germany 100.00 100.00
Sirius Gum B.V. Netherlands 100.00 100.00
Sirius Ivy B.V. Netherlands 100.00 100.00
Sirius Jasmine GmbH & Co. KG Germany 100.00 100.00
Sirius Juniper B.V. Netherlands 100.00 100.00
Sirius Kale GmbH & Co. KG Germany 100.00 100.00
Sirius Krefeld Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Lily B.V. Netherlands 100.00 100.00
Sirius Lotus GmbH & Co. KG Germany 100.00 100.00
Sirius Management One GmbH Germany 100.00 100.00
Sirius Management Two GmbH Germany 100.00 100.00
Sirius Management Three GmbH Germany 100.00 100.00
Sirius Management Four GmbH Germany 100.00 100.00
Sirius Management Five GmbH Germany 100.00 100.00
Sirius Management Six GmbH Germany 100.00 100.00
Sirius Management Seven GmbH Germany 100.00 100.00
Sirius Management Eight GmbH Germany 100.00 100.00
Sirius Management Nine GmbH Germany 100.00 100.00
Sirius Management Ten GmbH Germany 100.00 100.00
Sirius Mannheim B.V. Netherlands 100.00 100.00
Sirius Narcissus GmbH & Co. KG Germany 100.00 100.00
Sirius Oak B.V. Netherlands 100.00 100.00
Sirius One B.V. Netherlands 100.00 100.00
Sirius Orange B.V. Netherlands 100.00 100.00
Sirius Palm B.V. Netherlands 100.00 100.00
Sirius Pepper GmbH & Co. KG Germany 100.00 100.00
Sirius Pine B.V. Netherlands 100.00 100.00
Sirius Renewable Energy GmbH(2) Germany 100.00 n/a
Sirius Tamarack B.V. Netherlands 100.00 100.00
Sirius Three B.V. Netherlands 100.00 100.00
Sirius Thyme B.V. Netherlands 100.00 100.00
Sirius Tulip B.V. Netherlands 100.00 100.00
Sirius Two B.V. Netherlands 100.00 100.00
Sirius UK1 Ltd(1) UK 100.00 100.00
Sirius UK2 Ltd(1) UK 100.00 100.00
Sirius Willow B.V. Netherlands 100.00 100.00
Marba Bonn B.V. Netherlands 99.73 99.73
Marba Bremen B.V. Netherlands 99.73 99.73
Marba Brinkmann B.V. Netherlands 99.73 99.73
Marba Catalpa B.V. Netherlands 99.73 99.73
Marba Cedarwood B.V. Netherlands 99.73 99.73
Marba Chestnut B.V. Netherlands 99.73 99.73
Marba Dutch Holdings B.V. Netherlands 99.73 99.73
Marba Foxglove B.V. Netherlands 99.73 99.73
Marba HAG B.V. Netherlands 99.73 99.73
Marba Hornbeam B.V. Netherlands 99.73 99.73
Marba Königswinter B.V. Netherlands 99.73 99.73
Marba Maintal B.V. Netherlands 99.73 99.73
Marba Marigold B.V. Netherlands 99.73 99.73
Marba Merseburg B.V. Netherlands 99.73 99.73
Marba Mimosa B.V. Netherlands 99.73 99.73
Marba Regensburg B.V. Netherlands 99.73 99.73
Marba Saffron B.V. Netherlands 99.73 99.73
Marba Troisdorf B.V. Netherlands 99.73 99.73
Sirius Acerola GmbH & Co. KG Germany 99.73 99.73
Sirius Almond GmbH & Co. KG Germany 99.73 99.73
Sirius Bluebell GmbH & Co. KG Germany 99.73 99.73
Sirius Cypress GmbH & Co. KG Germany 99.73 99.73
Sirius Grape GmbH & Co. KG Germany 99.73 99.73
Sirius Hibiscus GmbH & Co. KG Germany 99.73 99.73
Sirius Indigo GmbH & Co. KG Germany 99.73 99.73
Sirius Mayflower GmbH & Co. KG Germany 99.73 99.73
Sirius Oyster GmbH & Co. KG Germany 99.73 99.73
Sirius Administration One GmbH & Co KG Germany 94.80 94.80
Sirius Administration Two GmbH & Co KG Germany 94.80 94.80
Verwaltungsgesellschaft Gewerbepark Bilderstöckchen
GmbH Germany 94.15 94.15
--------------------------------------------------------- ------------------ ---------- ---------
(1) Subsidiary company directly held by the parent entity, Sirius Real Estate Limited.
(2) New incorporated subsidiary company.
Investment in associates which are accounted for with the equity
method:
Ownership Ownership
at at
31 March 31 March
Country 2023 2022
Company name of incorporation % %
--------------------- ------------------ ---------- ---------
DDS Daisy B.V. Netherlands 35.00 35.00
DDS Edelweiss B.V. Netherlands 35.00 35.00
DDS Lime B.V. Netherlands 35.00 35.00
DDS Maple B.V. Netherlands 35.00 35.00
Sirius Boxwood B.V. Netherlands 35.00 35.00
Sirius Laburnum B.V. Netherlands 35.00 35.00
Sirius Orchid B.V. Netherlands 35.00 35.00
Sirius Pear B.V. Netherlands 35.00 100.00
--------------------- ------------------ ---------- ---------
35. Post balance sheet events
On 30 December 2022, the Company notarised for the disposal of
an asset in Wuppertal for a sale price of EUR8.8 million. The
transaction completed on 1 April 2023.
In May 2023 the Company refinanced its EUR57.3 million Deutsche
Pfandbriefbank (PBB) loan facility, seven months in advance of it
falling due on 31 December 2023. The new facility amounting to
EUR58.3 million has a term of seven years at a fixed interest rate
of 4.25%.
Business analysis (Unaudited Information)
Non-IFRS measures
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
--------------------------------------------------------- ---------- ----------
Total profit for the year attributable to the
owners of the Company 79.6 147.9
Add loss/(deduct gain) on revaluation of investment
properties 9.8 (140.9)
(Deduct gain)/add loss on disposal of properties
(net of related tax) (4.7) 0.6
Deduct recoveries from prior disposals of subsidiaries
(net of related tax) - (0.1)
Add restructuring costs, exit fees and prepayment
penalties - 7.8
Goodwill impairment - 40.9
Acquisition costs in relation to business combinations - 5.3
Change in fair value of derivative financial instruments (0.9) (1.0)
Deferred tax in respect of EPRA fair value movements
on investment properties 4.3 14.8
NCI relating to revaluation (net of related tax) - 0.2
Add loss/(deduct gain) on revaluation of investment
property relating to associates 0.5 (6.0)
Tax in relation to the revaluation gains/losses
on investment property relating to associates above (0.4) 1.2
--------------------------------------------------------- ---------- ----------
EPRA earnings 88.2 70.7
Deduct change in deferred tax relating to derivative
financial instruments (0.1) (0.2)
Add change in fair value of derivative financial
instruments 0.9 1.0
Deduct restructuring costs, exit fees and prepayment
penalties - (7.8)
Deduct acquisition costs in relation to business
combinations - (5.3)
NCI in respect of the above - -
--------------------------------------------------------- ---------- ----------
Headline earnings after tax 89.0 58.4
Deduct change in fair value of derivative financial
instruments (net of related tax and NCI) (0.8) (0.8)
Deduct revaluation expense relating to leased investment
properties (1.5) (5.6)
Add adjusting items(1) (net of related tax and
NCI) 6.2 19.1
--------------------------------------------------------- ---------- ----------
Adjusted earnings after tax 92.9 71.1
--------------------------------------------------------- ---------- ----------
(1) See note 12 to the financial statements.
For more information on EPRA earnings refer to Annex 1.
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
------------------------------------------- ------------- -------------
EPRA earnings 88.2 70.7
Weighted average number of ordinary shares 1,167,757,975 1,097,082,162
------------------------------------------- ------------- -------------
EPRA earnings per share (cents) 7.55 6.44
------------------------------------------- ------------- -------------
Headline earnings after tax 89.0 58.4
Weighted average number of ordinary shares 1,167,757,975 1,097,082,162
------------------------------------------- ------------- -------------
Headline earnings per share (cents) 7.62 5.32
------------------------------------------- ------------- -------------
Adjusted earnings after tax 92.9 71.1
Weighted average number of ordinary shares 1,167,757,975 1,097,082,162
------------------------------------------- ------------- -------------
Adjusted earnings per share (cents) 7.96 6.48
------------------------------------------- ------------- -------------
Geographical property analysis - owned investment properties
Germany
% of
portfolio
Annualised by
No. of Total Rate rent annualised Value
owned sqm psqm roll rent EURm Gross Net WALE WALE
March 2023 properties 000 Occupancy EUR EURm roll (2) yield yield rent sqm
---------------- ----------- ----- --------- ----- ---------- ------------ ------- ------ ------ ----- ----
Frankfurt 17 376 84.5% 7.41 28.3 23% 369.9 7.6% 6.9% 2.6 2.5
Berlin 4 104 95.7% 8.57 10.2 8% 166.7 6.1% 5.9% 2.6 2.6
Stuttgart 9 330 91.5% 5.36 19.4 16% 248.5 7.8% 7.3% 3.1 3.4
Cologne 7 127 88.6% 8.58 11.6 9% 158.1 7.3% 7.0% 3.1 3.0
Munich 3 124 82.7% 8.66 10.6 9% 202.8 5.2% 4.7% 2.1 2.2
Düsseldorf 16 386 73.8% 6.27 21.4 17% 290.7 7.4% 6.0% 3.0 3.1
Hamburg 4 91 83.7% 5.43 5.0 4% 64.2 7.8% 7.2% 2.3 2.2
Other 10 255 78.5% 6.91 16.6 13% 196.7 8.4% 7.4% 2.7 2.6
---------------- ----------- ----- --------- ----- ---------- ------------ ------- ------ ------ ----- ----
Total Germany 70 1,793 83.4% 6.86 123.1 100% 1,697.6 7.3% 6.5% 2.8 2.8
---------------- ----------- ----- --------- ----- ---------- ------------ ------- ------ ------ ----- ----
UK
% of
Annualised portfolio
rent by
No. of Total Rate roll annualised Value
owned sqm psqm EURm rent EURm Net WALE WALE
March 2023 properties 000 Occupancy EUR (1) (1) roll (2) yield rent sqm
----------- ----------- ----- --------- -------- ---------- ------------ ----- ------ ----- ----
Midlands 11 55 83.3% 16.02 8.7 16% 65.0 9.0% 0.8 0.8
North 13 73 83.1% 11.58 8.4 15% 65.0 9.0% 0.8 1.0
North East
and North 13 91 93.7% 6.69 6.9 13% 60.8 8.0% 1.8 2.3
North West 12 84 87.8% 11.04 9.8 18% 77.9 8.9% 1.1 1.0
South East 10 25 76.5% 31.47 7.3 13% 66.0 7.9% 0.5 1.3
South West 11 62 84.8% 22.46 14.1 26% 83.0 12.0% 1.1 0.8
----------- ----------- ----- --------- -------- ---------- ------------ ----- ------ ----- ----
Total UK 70 390 86.5% 13.66 55.2 100% 417.7 9.3% 1.0 1.3
----------- ----------- ----- --------- -------- ---------- ------------ ----- ------ ----- ----
(1) The Group's UK business charges licence customers an
all-inclusive rate, which includes an implicit element of service
charge.
(2) Book value of owned investment properties including assets held for sale.
Usage analysis
Germany
Annualised
Total % of total Occupied % of occupied rent roll % of annualised Vacant Rate psqm
Usage sqm sqm sqm sqm EURm rent roll sqm EUR
-------------- --------- ---------- --------- ------------- ---------- --------------- ------- ---------
Office 604,976 33.7% 473,914 31.7% 47.5 38.6% 131,061 8.36
Storage 583,655 32.6% 498,496 33.3% 30.4 24.7% 85,158 5.09
Production 364,201 20.3% 337,942 22.6% 20.8 16.9% 26,259 5.12
Smartspace 112,896 6.3% 74,262 5.0% 8.5 6.9% 38,635 9.55
Other(1) 126,942 7.1% 110,114 7.4% 15.9 12.9% 16,829 12.01
-------------- --------- ---------- --------- ------------- ---------- --------------- ------- -----------
Total Germany 1,792,670 100.0% 1,494,728 100.0% 123.1 100.0% 297,942 6.86
-------------- --------- ---------- --------- ------------- ---------- --------------- ------- -----------
UK
Annualised
Total % of total Occupied % of occupied rent roll % of annualised Vacant Rate psqm
Usage sqm sqm sqm sqm EURm (3) rent roll sqm EUR (3)
--------- ------- ---------- -------- ------------- ---------- --------------- ------ ---------
Office 122,711 31.5% 98,151 29.2% 33.7 61.1% 24,560 28.65
Workshop 251,510 64.6% 228,076 67.7% 19.8 35.9% 23,434 7.23
Storage 2,070 0.5% 1,376 0.4% 0.3 0.5% 694 17.09
Other(2) 13,246 3.4% 9,175 2.7% 1.4 2.5% 4,071 12.55
--------- ------- ---------- -------- ------------- ---------- --------------- ------ ---------
Total UK 389,537 100.0% 336,778 100.0% 55.2 100.0% 52,759 13.66
--------- ------- ---------- -------- ------------- ---------- --------------- ------ ---------
(1) Other includes: catering, other usage, residential and technical space, land and car parking.
(2) Other includes: aerials, car parking, retail units, yards, catering and residential.
(3) The Group's UK business charge licences customers an
all-inclusive rate, which includes an implicit element of service
charge.
Lease expiry profile of future minimum lease payments receivable
under non-cancellable leases
Germany by income
Adjustments
in relation
to
Office Production Storage Smartspace Other (1) lease incentives Total
EURm EURm EURm EURm EURm EURm EURm
-------------- ------ ---------- ------- ---------- --------- ----------------- -----
Less than 1
year 42.5 19.6 27.4 3.3 13.6 (0.3) 106.1
Between 1 and
5 years 74.5 36.5 48.7 0.8 24.1 (0.1) 184.5
More than 5
years 11.9 8.4 9.2 - 6.5 - 36.0
-------------- ------ ---------- ------- ---------- --------- ----------------- -----
Total 128.9 64.5 85.3 4.1 44.2 (0.4) 326.6
-------------- ------ ---------- ------- ---------- --------- ----------------- -----
Germany by sqm
Office Production Storage Smartspace Other (1) Total
sqm sqm sqm sqm sqm sqm
---------------------- ------- ---------- ------- ---------- --------- ---------
Less than 1 year 131,555 46,388 132,915 65,365 22,833 399,056
Between 1 and 5 years 287,951 241,220 305,391 8,897 71,560 915,019
More than 5 years 54,408 50,334 60,190 - 15,721 180,653
---------------------- ------- ---------- ------- ---------- --------- -----------
Total 473,914 337,942 498,496 74,262 110,114 1,494,728
---------------------- ------- ---------- ------- ---------- --------- -----------
(1) Other includes: catering, other usage, residential and technical space, land and car parking.
UK by income
Adjustments
in relation
to
Office Workshop Storage Other (2) lease incentives Total
EURm EURm EURm EURm EURm EURm
---------------------- ------ -------- ------- --------- ----------------- -----
Less than 1 year 8.8 4.5 0.1 0.2 - 13.6
Between 1 and 5 years 18.6 11.4 - 0.4 - 30.4
More than 5 years 5.5 3.6 - 2.9 - 12.0
---------------------- ------ -------- ------- --------- ----------------- -----
Total 32.9 19.5 0.1 3.5 - 56.0
---------------------- ------ -------- ------- --------- ----------------- -----
UK by sqm
Office Workshop Storage Other (2) Total
sqm sqm sqm sqm sqm
---------------------- ------ -------- ------- --------- -------
Less than 1 year 65,641 134,958 1,367 3,543 205,509
Between 1 and 5 years 29,043 83,120 9 1,582 113,754
More than 5 years 3,467 14,047 - 1 17,515
---------------------- ------ -------- ------- --------- -------
Total 98,151 232,125 1,376 5,126 336,778
---------------------- ------ -------- ------- --------- -------
(2) Other includes: aerials, car parking, retail units, yards, catering and residential.
The Group's UK business provides flexible leases that represent
approximately 75% of annualised rent roll and conventional leases
that represent 25% of annualised rent roll.
Escalation profile per usage
Germany
The Group's German business' primary source of revenue relates
to leasing contracts with tenants. The Group's German business
realises escalations as a result of renewals, inflation linked
indexations and contractually agreed uplifts. Approximately 33.4%
of contracts in place at 31 March 2023 are subject to contractual
uplifts. The average contractual uplift over the coming twelve
months split by usage are detailed as follows:
Increase in
Usage %
----------- -----------
Office 3.09%
Storage 3.42%
Production 2.82%
Smartspace 7.59%
Other(1) 3.37%
----------- -------------
Total 3.25%
----------- -----------
(1) Other includes: catering, other usage, residential and technical space, land and car parking.
UK
The Group's UK business' primary source of revenue relates to
leasing contracts and licence fee agreements with tenants. The
Group's UK business realises escalations as a result of renewals,
inflation linked indexations and contractually agreed uplifts. Of
the lease contracts in place at 31 March 2023, approximately 5.1%
are subject to contractual uplifts. The average contractual lease
contract uplifts over the coming twelve months split by usage are
detailed as follows:
Increase
Usage in %
--------- --------
Office 3.34%
Workshop 6.14%
--------- --------
Total 5.13%
--------- --------
Property profile March 2023*
Germany
Total Office Storage Production Other (1) Rate psqm
Property and location sqm sqm sqm sqm sqm EUR
---------------------------------- --------- ------- ------- ---------- --------- ---------
Aachen I 24,443 12,701 2,246 5,510 3,986 9.31
Aachen II 9,751 1,437 6,610 1,510 194 6.67
Alzenau 66,533 27,702 7,451 24,087 7,293 7.10
Bochum 55,511 12,696 35,970 3,965 2,880 4.71
Bochum II 4,249 3,502 479 12 256 11.41
Bonn 9,030 3,087 2,403 477 3,063 8.21
Bonn - Dransdorf 19,202 5,505 6,891 1,665 5,141 7.63
Buxtehude 28,238 1,120 10,831 13,420 2,867 4.25
Cölln Parc 13,480 6,512 3,386 2,867 715 10.70
Cologne 30,250 2,672 13,509 2,709 11,360 5.83
Dreieich 12,886 7,404 2,929 - 2,553 8.22
Dreieich II 5,514 546 4,543 - 425 4.24
Dresden 57,658 25,925 17,437 11,153 3,143 8.42
Düsseldorf - Süd 21,403 2,814 12,376 1,970 4,243 7.48
Düsseldorf II 9,839 4,433 4,949 - 457 8.16
Düsseldorf III 33,937 22,491 10,611 169 666 10.33
Erfurt 23,184 7,531 11,980 - 3,673 3.59
Essen 15,228 6,075 4,806 2,367 1,980 6.63
Essen II 11,899 8,538 1,829 627 905 7.91
Fellbach 26,214 1,751 16,168 340 7,955 6.05
Fellbach II 9,707 5,023 205 - 4,479 10.54
Frankfurt 4,260 2,260 484 68 1,448 11.39
Frankfurt III 10,141 5,398 1,370 - 3,373 14.16
Frankfurt Röntgenstraße 5,496 3,957 444 36 1,059 12.37
Freiburg Teningen 20,796 7,151 6,108 5,578 1,959 5.19
Frickenhausen 27,859 6,515 8,499 10,742 2,103 5.66
Friedrichsdorf 17,572 6,492 5,475 3,199 2,406 8.14
Gartenfeld 25,453 5,375 10,821 3,297 5,960 9.28
Grasbrunn 14,274 7,269 4,743 - 2,262 11.87
Hallbergmoss 18,384 11,978 3,388 - 3,018 10.59
Hamburg Lademannbogen 10,305 8,081 1,049 - 1,175 10.17
Hanover 22,884 8,030 3,547 6,423 4,884 6.80
Heidenheim 46,843 8,415 15,384 13,864 9,180 4.62
Heiligenhaus 44,485 21,999 7,453 12,467 2,566 3.90
Kassel 8,142 3,312 683 3,875 272 5.76
Köln Porz 21,086 15,154 2,363 279 3,290 12.32
Krefeld 11,318 7,462 2,533 594 729 8.33
Krefeld II 6,101 2,893 325 2,171 712 7.96
Krefeld III 9,668 4,918 3,342 924 484 8.32
Ludwigsburg 28,351 7,393 10,158 3,585 7,215 6.75
Mahlsdorf 29,333 11,592 10,796 1,963 4,982 8.36
Mahlsdorf II 12,737 5,765 1,263 1,906 3,803 8.14
Maintal 36,509 7,586 14,362 8,289 6,272 6.44
Maintal Mitte 11,016 462 4,523 5,685 346 4.60
Mannheim 68,789 13,378 21,595 27,139 6,677 5.18
Mannheim II 14,316 6,234 4,038 586 3,458 6.61
Mannheim III 3,033 2,276 741 - 16 7.12
Markgröningen 57,312 4,532 30,853 19,921 2,006 3.62
Munich - Neuaubing 91,185 15,991 31,821 29,645 13,728 8.02
Nabern II 5,578 1,620 491 2,376 1,091 8.86
Neckartenzlingen 51,577 15,296 19,466 14,087 2,728 4.73
Neu-Isenburg 8,250 5,752 1,244 - 1,254 9.98
Neuruppin 22,959 1,404 7,629 13,133 793 5.38
Neuss 17,621 13,397 1,284 153 2,787 12.63
Neuss II 33,351 7,957 17,210 6,058 2,126 5.76
Norderstedt 12,627 3,052 7,507 172 1,896 5.47
Nürnberg 14,106 2,323 3,241 7,532 1,010 6.99
Oberhausen 82,891 47,219 26,339 1,739 7,594 5.65
Offenbach Carl Legien-Strasse 45,596 9,844 9,326 17,677 8,749 7.02
Offenbach I 15,044 3,610 2,335 2,351 6,748 6.95
Öhringen 18,761 1,969 7,448 8,772 572 5.60
Pfungstadt 32,662 6,707 12,300 9,786 3,869 6.06
Potsdam 35,863 12,490 12,720 4,956 5,697 8.40
Potsdam II 236 165 71 - - -
Rastatt 19,884 5,739 7,280 2,199 4,666 7.05
Rostock 18,640 8,228 1,569 6,606 2,237 6.60
Saarbrücken 46,899 28,752 9,753 2,280 6,114 9.21
Schenefeld 40,250 10,283 26,500 1,961 1,506 5.02
Solingen 13,333 2,475 4,409 4,924 1,525 2.88
Stuttgart - Kirchheim 18,260 14,335 1,261 - 2,664 6.46
Wiesbaden 14,619 855 5,608 3,613 4,543 16.99
Wuppertal 18,260 14,335 1,261 - 2,664 4.41
---------------------------------- --------- ------- ------- ---------- --------- ---------
Total 1,792,670 604,976 583,655 364,201 239,839 6.86
---------------------------------- --------- ------- ------- ---------- --------- ---------
UK
Total Office Workshop Storage Other (2) Rate psqm
Property and location sqm sqm sqm sqm sqm EUR (3)
--------------------------- ------- ------- -------- ------- --------- ---------
Altrincham 4,498 1,442 2,768 - 288 18.74
Ashford 1,823 1,823 - - - 39.88
Barnsley 6,637 546 5,929 - 162 7.73
Basingstoke 10,313 10,138 - - 175 31.67
Birmingham - Tyseley 12,154 805 9,576 1,233 540 9.59
Bradford - Dudley
Hill 15,070 5,476 5,436 837 3,321 8.98
Bristol - Equinox 11,282 1,104 10,014 - 164 7.59
Bury 1,304 1,303 - - 1 47.63
Camberwell - Lomond 2,015 1,243 557 - 215 35.40
Cardiff 4,106 4,105 - - 1 32.31
Cheadle 1,628 1,600 - - 28 36.59
Christchurch 2,663 2,058 605 - - 29.10
Consett 3,094 - 3,094 - - 4.56
Coventry 1,622 1,622 - - - 17.76
Design Works 4,803 3,402 582 - 819 15.95
Didcot 1,021 491 510 - 20 33.01
Dinnington 3,648 1,000 2,648 - - 11.07
Doncaster 3,040 3,039 - - 1 24.69
Dorking 2,148 1,406 715 - 27 41.72
Egham 1,001 926 - - 75 36.83
Fareham 1,758 1,758 - - - 43.76
Gateshead 13,160 - 11,927 - 1,233 4.11
Gloucester 20,767 2,989 16,685 - 1,093 5.89
Gloucester - Barnwood 3,402 3,378 24 - - 37.77
Hartlepool - Oakesway 2,585 - 2,585 - - 2.48
Hebburn 5,463 - 5,397 - 66 7.32
Hemel Hempstead 4,389 4,387 - - 2 33.29
Hooton 1,383 1,230 - - 153 25.64
Hove 2,939 2,194 695 - 50 33.84
Huddersfield - Linthwaite 2,365 - 2,364 - 1 8.08
Leeds - Brooklands 2,133 2,042 - - 91 23.32
Leeds - Wortley 3,734 - 3,733 - 1 6.86
Letchworth 3,048 2,385 661 - 2 16.49
Littlehampton 1,992 1,991 - - 1 38.95
London - Colney 1,887 1,767 - - 120 34.03
M25 Business Centre 3,282 2,151 1,085 - 46 36.03
Maidstone 1,644 1,643 - - 1 40.81
Manchester - Trafford
Park 8,695 - 8,676 - 19 9.51
Manchester - Newton
Heath 5,660 2,273 3,353 - 34 17.50
Manchester - Old
Trafford 4,578 1,513 2,996 - 69 25.32
Milton Keynes 3,654 3,593 13 - 48 31.14
New Addington - Croydon 6,540 381 6,158 - 1 14.41
Newcastle - Amber
Court 4,297 4,297 - - - 25.21
Northampton - K2 4,688 57 4,630 - 1 12.46
Northampton - KG 12,617 910 11,609 - 98 9.56
Nottingham - Arnold 5,547 1,337 4,009 - 201 9.43
Nottingham - Park
Row 4,160 4,110 - - 50 38.41
Nottingham - Roden 4,604 35 4,537 - 32 7.58
Oldham - Hollinwood 5,525 5,496 - - 29 23.09
Perivale 2,148 543 1,604 - 1 31.66
Peterlee 18,306 - 18,305 - 1 4.19
Poole 6,735 6,586 - - 149 26.51
Preston 5,341 1,741 3,577 - 23 16.67
Rochdale - Fieldhouse 23,042 527 22,329 - 186 3.98
Rochdale - Moss Mill 15,950 14 14,442 - 1,494 4.20
Rotherham 4,504 1,361 3,112 - 31 13.30
Sandy Business Park 9,261 108 9,152 - 1 8.07
Sheffield - Cricket 1,928 - 1,928 - - 10.29
Shipley 2,238 2,238 - - - 13.22
Solihull 1,715 1,714 - - 1 55.99
Stanley 3,776 - 3,776 - - 5.54
Stoke 5,119 - 5,118 - 1 6.01
Sunderland - North
Sands 2,819 2,818 - - 1 18.84
Swindon 6,833 338 6,414 - 81 15.73
Theale 2,765 2,708 - - 58 57.57
Wakefield 20,703 619 18,443 - 1,641 4.51
Warrington - Craven
Court 3,830 - 3,830 - - 11.08
Wimbledon 3,170 1,459 1,569 - 142 39.01
Wolverhampton - Willenhall 5,077 581 4,340 - 156 9.69
--------------------------- ------- ------- -------- ------- --------- ---------
Total 389,537 122,711 251,510 2,070 13,246 13.66
--------------------------- ------- ------- -------- ------- --------- ---------
* Excluding commercial leased investment properties.
(1) Other includes: Smartspace, catering, other usage,
residential and technical space, land and car parking.
(2) Other includes: aerials, car parking, retail units, yards, catering and residential.
(3) The Group's UK business charges licence customers an
all-inclusive rate, which includes an implicit element of service
charge.
Annex 1- Non-IFRS Measures
Basis of preparation
The Directors of Sirius Real Estate Limited have chosen to
disclose additional non-IFRS measures; these include EPRA earnings,
adjusted net asset value, EPRA net reinstatement value, EPRA net
tangible assets, EPRA net disposal value, EPRA loan to value,
adjusted profit before tax and funds from operations (collectively,
"Non-IFRS Financial Information").
The Directors have chosen to disclose:
-- EPRA earnings in order to assist in comparisons with similar
businesses in the real estate sector. EPRA earnings is a definition
of earnings as set out by the European Public Real Estate
Association. EPRA earnings represents earnings after adjusting for
gains/losses on revaluation of investment properties, gains/losses
on disposal of properties (net of related tax), recoveries from
prior disposals of subsidiaries (net of related tax), refinancing
costs, exit fees and prepayment penalties, goodwill impairment,
acquisition costs in relation to business combinations, changes in
fair value of derivative financial instruments, (collectively, the
"EPRA earnings adjustments"), deferred tax in respect of the EPRA
earnings adjustments, NCI relating to revaluation (net of related
tax), gains/losses on revaluation of investment property relating
to associates and the related tax thereon. The reconciliation
between basic and diluted earnings and EPRA earnings is detailed in
table A below.
-- Adjusted net asset value in order to assist in comparisons
with similar businesses. Adjusted net asset value represents net
asset value after adjusting for derivative financial instruments at
fair value and net deferred tax liability. The reconciliation for
adjusted net asset value is detailed in table B below.
-- EPRA net reinstatement value ("EPRA NRV") in order to assist
in comparisons with similar businesses in the real estate sector.
EPRA NRV is a definition of net asset value as set out by the
European Public Real Estate Association. EPRA NRV represents net
asset value after adjusting for derivative financial instruments at
fair value, deferred tax relating to valuation movements and
derivative financial instruments and real estate transfer tax
presented in the Valuation Certificate (for the entire consolidated
Group including wholly owned entities and investment in
associates). The reconciliation for EPRA NRV is detailed in table C
below.
-- EPRA net tangible assets ("EPRA NTA") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA
NTA is a definition of net asset value as set out by the European
Public Real Estate Association. EPRA NTA represents net asset value
after adjusting for derivative financial instruments at fair value,
deferred tax relating to valuation movements (excluding that
relating to assets held for sale) and derivative financial
instruments and intangible assets as per the note reference in the
audited consolidated statement of financial position (for the
entire consolidated Group including wholly owned entities and
investment in associates). The reconciliation for EPRA NTA is
detailed in table C below.
-- EPRA net disposal value ("EPRA NDV") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA
NDV is a definition of net asset value as set out by the European
Public Real Estate Association. EPRA NDV represents net asset value
after adjusting for the fair value of fixed interest rate debt (for
the entire consolidated Group including wholly owned entities and
investment in associates). The reconciliation for EPRA NDV is
detailed in table C below.
-- EPRA loan to value ("EPRA LTV") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA
LTV is a definition of loan to value ratio as set out by the
European Public Real Estate Association. EPRA LTV represents net
debt to total property value as defined in note 24. It includes all
capital which is not equity as debt, irrespective of its IFRS
classification, and is based upon proportional consolidation,
therefore including the Group's share in the net debt and net
assets of associates. Assets are included at fair value, net debt
at nominal value. The reconciliation for EPRA LTV is detailed in
table D below.
-- Adjusted profit before tax in order to provide an alternative
indication of Sirius Real Estate Limited and it's subsidiaries'
(the "Group") underlying business performance. Accordingly, it
adjusts for the effect of the gains/losses on revaluation of
investment properties, deficit on revaluation relating to leased
investment properties, gains/losses on disposal of properties,
recoveries from prior disposals of subsidiaries, gains/losses on
revaluation of investment property from associates and related tax,
other adjusting items, goodwill impairment and change in fair value
of derivative financial instruments. The reconciliation for
adjusted profit before tax is detailed in table E below.
-- Funds from operations in order to assist in comparisons with
similar businesses and to facilitate the Group's dividend policy
which is derived from is adjusted profit before tax. Accordingly,
funds from operations excludes depreciation and amortisation
(excluding depreciation relating to IFRS 16), net foreign exchange
differences, amortisation of financing fees, adjustment in respect
of IFRS 16 and current tax excluding tax on disposals. The
reconciliation for funds from operations is detailed in table E
below.
The Non-IFRS Financial Information is presented in accordance
with the JSE Listings Requirements and The Guide on Pro forma
Financial Information, issued by SAICA. The Non-IFRS Financial
Information is the responsibility of the Directors. The Non-IFRS
Financial Information has been presented for illustrative purposes
and, due to its nature, may not fairly present the Group's
financial position or result of operations. The Non-IFRS Financial
Information required by the JSE Listings Requirements solely
relates to Headline Earnings Per Share and not EPRA.
Ernst & Young Inc have issued a reporting accountant's
report on the Non-IFRS Financial Information for the year ended 31
March 2023 which is available for inspection at the Group's
registered office. The starting point for all the Non-IFRS
Financial Information has been extracted, without adjustment, from
the audited Group's consolidated financial statements for the year
ended 31 March 2023 (the "consolidated financial statements").
Table A - EPRA earnings
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
------------------------------------------------------------ ---------- ----------
Basic and diluted earnings attributable to owners
of the Company(1) 79.6 147.9
Add loss/(deduct gain) on revaluation of investment
properties(2) 9.8 (140.9)
(Deduct gain)/add loss on disposal of properties
(net of related tax)(3) (4.7) 0.6
Deduct recoveries from prior disposals of subsidiaries
(net of related tax) (4) - (0.1)
Refinancing costs, exit fees and prepayment penalties(5) - 7.8
Goodwill impairment(6) - 40.9
Acquisition costs in relation to business combinations(7) - 5.3
Change in fair value of derivative financial instruments(8) (0.9) (1.0)
Deferred tax in respect of EPRA fair value movements
on investment properties(9) 4.3 14.8
NCI relating to revaluation (net of related tax)(10) - 0.2
Add loss/(deduct gain) on revaluation of investment
property relating to associates(11) 0.5 (6.0)
Tax in relation to the revaluation gains/losses on
investment property relating to associates(12) (0.4) 1.2
------------------------------------------------------------ ---------- ----------
EPRA earnings (13) 88.2 70.7
------------------------------------------------------------ ---------- ----------
Notes:
(1) Presents the profit attributable to owners of the Company
which has been extracted from the consolidated income statement
within the consolidated financial statements.
(2) Presents the gain or loss on revaluation of investment
properties which has been extracted from the consolidated income
statement within the consolidated financial statements.
(3) Presents the gain or loss on disposal of properties (net of
related tax) which has been extracted from note 12 within the
consolidated financial statements.
(4) Presents the recoveries from prior disposals of subsidiaries
(net of related tax) which has been extracted from the consolidated
income statement within the consolidated financial statements.
(5) Presents the refinancing costs, exit fees and prepayment
penalties which have been extracted from note 10 within the
consolidated financial statements.
(6) Presents the goodwill impairment which has been extracted
from the consolidated income statement within the consolidated
financial statements.
(7) Presents the acquisition costs in relation to business
combinations which have been extracted from note 4 within the
consolidated financial statements.
(8) Presents the change in fair value of derivative financial
instruments which has been extracted from the consolidated income
statement within the consolidated financial statements.
(9) Presents deferred tax relating to origination and reversal
of temporary differences of the EPRA fair value movements on
investment properties which has been extracted from note 11 within
the consolidated financial statements.
(10) Presents the non-controlling interest relating to
revaluation (net of related tax) which has been extracted from note
12 within the consolidated financial statements.
(11) Presents the gain or loss on revaluation of investment
property relating to associates which has been extracted from note
12 within the consolidated financial statements.
(12) Presents tax in relation to the revaluation gains/losses on
investment property relating to associates which has been extracted
from note 12 within the consolidated financial statements.
(13) Presents the EPRA earnings for the year.
Table B - Adjusted net asset value
31 March 31 March
2023 2022
EURm EURm
------------------------------------------------------------- -------- --------
Net asset value
Net asset value for the purpose of assets per share
(total equity attributable to the owners of the company)(1) 1,197.1 1,190.7
Deferred tax liabilities(2) 80.2 75.9
Derivative financial instruments at fair value(3) (1.3) (0.3)
------------------------------------------------------------- -------- --------
Adjusted net asset value attributable to owners
of the Company (4) 1,276.0 1,266.3
------------------------------------------------------------- -------- --------
Notes:
(1) Presents the net asset value for the purpose of assets per
share (total equity attributable to the owners of the company)
which has been extracted from the consolidated statement of
financial position within the consolidated financial statements
(2) Presents the net deferred tax liabilities or assets which
have been extracted from the consolidated statement of financial
position within the consolidated financial statements relating to
valuation movements, derivative financial instruments and LTIP
valuation.
(3) Presents current derivative financial instrument assets
which have been extracted from the consolidated statement of
financial position within the consolidated financial
statements.
(4) Presents the adjusted net asset value attributable to the
owners of the Company as at year end.
Table C - EPRA net asset measures
EPRA NRV EPRA NTA EPRA NDV
31 March 2023 EURm EURm EURm
------------------------------------------- -------- -------- --------
Net asset value as at year end (basic)(1) 1,197.1 1,197.1 1,197.1
------------------------------------------- -------- -------- --------
Diluted EPRA net asset value at fair value 1,197.1 1,197.1 1,197.1
------------------------------------------- -------- -------- --------
Group
Derivative financial instruments at fair
value(2) (1.3) (1.3) n/a
Deferred tax in respect of EPRA fair value
movements on investment properties(3) 80.2 80.1 n/a
Intangibles(4) n/a (4.1) n/a
Fair value of fixed interest rate debt(5) n/a n/a 99.2
Real estate transfer tax(6) 164.4 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value
movements on investment properties(3) 7.0 7.0 n/a
Fair value of fixed interest rate debt(5) n/a n/a 9.9
Real estate transfer tax(6) 9.3 n/a n/a
------------------------------------------- -------- -------- --------
Total EPRA NRV, NTA and NDV (7) 1,456.7 1,278.8 1,306.2
------------------------------------------- -------- -------- --------
EPRA NRV EPRA NTA EPRA NDV
31 March 2022 EURm EURm EURm
------------------------------------------- -------- -------- --------
Net asset value as at year end (basic)(1) 1,190.7 1,190.7 1,190.7
------------------------------------------- -------- -------- --------
Diluted EPRA net asset value at fair value 1,190.7 1,190.7 1,190.7
------------------------------------------- -------- -------- --------
Group
Derivative financial instruments at fair
value(2) (0.3) (0.3) n/a
Deferred tax in respect of EPRA fair value
movements on investment properties(3) 75.9 75.6* n/a
Intangibles(4) n/a (4.3) n/a
Fair value of fixed interest rate debt(5) n/a n/a (22.2)
Real estate transfer tax(6) 160.7 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value
movements on investment properties(3) 6.5 6.5* n/a
Fair value of fixed interest rate debt(5) n/a n/a 2.1
Real estate transfer tax(6) 9.1 n/a n/a
------------------------------------------- -------- -------- --------
Total EPRA NRV, NTA and NDV (7) 1,442.6 1,268.2 1,170.6
------------------------------------------- -------- -------- --------
* The Company intends to hold and does not intend in the long
term to sell any of the investment properties and has excluded such
deferred taxes for the whole portfolio as at year end except for
deferred tax in relation to assets held for sale.
Notes:
(1) Presents the net asset value for the purpose of assets per
share (total equity attributable to the owners of the company)
which has been extracted from the consolidated statement of
financial position within the consolidated financial
statements.
(2) Presents current derivative financial instrument assets
which have been extracted from the consolidated statement of
financial position within the consolidated financial
statements.
(3) Presents for the Group the net deferred tax liabilities or
assets which have been extracted from note 11 within the
consolidated financial statements and for EPRA NTA only the
additional credit adjustment for the deferred tax expense relating
to assets held for sale of EUR0.1m (2022: EUR0.3m). For investment
in associates the deferred tax income/(expense) arising on
revaluation losses/gains amounted to EUR0.4m (2022: EUR6.6m).
(4) Presents the net book value of software and licences with
definite useful life which has been extracted from note 17 within
the consolidated financial statements.
(5) Presents the fair value of financial liabilities and assets
on the statement of financial position, net of any related deferred
tax.
(6) Presents the add-back of purchasers' costs in order to
reflect the value prior to any deduction of purchasers' costs, as
shown in the Valuation Certificate of Cushman & Wakefield
LLP.
(7) Presents the EPRA NRV, EPRA NTA and EPRA NDV, respectively, as at year end.
Table D - EPRA LTV metric
Proportionate
consolidation
--------------
Investment
Group in associates Total
31 March 2023 EURm EURm EURm
-------------------------------------- ------- -------------- -------
Interest-bearing loans and borrowings
(1) 264.4 52.1 316.5
Corporate bonds (2) 700.0 - 700.0
Net payables(3) 71.0 4.5 75.5
Cash and cash equivalents(4) (124.3) (8.6) (132.9)
-------------------------------------- ------- -------------- -------
Net debt (a) (5) 911.1 48.0 959.1
-------------------------------------- ------- -------------- -------
Investment properties (6) 2,123.0 124.2 2,247.2
Assets held for sale (7) 8.8 - 8.8
Plant and equipment (8) 7.2 - 7.2
Intangible assets (9) 4.1 - 4.1
Loan to associates(10) 44.3 - 44.3
-------------------------------------- ------- -------------- -------
Total property value (b) (11) 2,187.4 124.2 2,311.6
-------------------------------------- ------- -------------- -------
EPRA LTV (a/b) (12) 41.7% 38.6% 41.5%
-------------------------------------- ------- -------------- -------
Proportionate
consolidation
--------------
Investment
Group in associates Total
31 March 2022 EURm EURm EURm
-------------------------------------- ------- -------------- -------
Interest-bearing loans and borrowings
(1) 281.5 51.9 333.4
Corporate bonds (2) 700.0 - 700.0
Net payables(3) 70.7 3.1 73.8
Cash and cash equivalents(4) (151.0) (6.2) (157.2)
-------------------------------------- ------- -------------- -------
Net debt (a) (5) 901.2 48.8 950.0
-------------------------------------- ------- -------------- -------
Investment properties (6) 2,100.0 122.4 2,222.4
Assets held for sale (7) 13.8 - 13.8
Plant and equipment (8) 5.5 - 5.5
Intangible assets (9) 4.3 - 4.3
Loan to associates(10) 44.2 - 44.2
-------------------------------------- ------- -------------- -------
Total property value (b) (11) 2,167.8 122.4 2,290.2
-------------------------------------- ------- -------------- -------
EPRA LTV (a/b) (12) 41.6% 39.9% 41.5%
-------------------------------------- ------- -------------- -------
Notes:
(1) Presents the interest-bearing loans and borrowings which
have been extracted from the consolidated statement of financial
position within the consolidated financial statements less the
corporate bonds which have been extracted from note 24 within the
consolidated financial statements.
(2) Presents the corporate bonds which have been extracted from
note 24 within the consolidated financial statements.
(3) Presents the net payables, which is the sum of trade and
other receivables, derivative financial instruments, trade and
other payables, current tax liabilities (all of which have been
extracted from the consolidated statement of financial position
within the consolidated financial statements) and guarantees and
deposits which have been extracted from note 19 within the
consolidated financial statements.
(4) Presents the cash and cash equivalents which have been
extracted from the consolidated statement of financial position
within the consolidated financial statements.
(5) Presents the net debt, which is the sum of interest-bearing
loans and borrowings, corporate bonds, net payables, less cash and
cash equivalents which have been extracted from note 24 within the
consolidated financial statements.
(6) Presents the investment properties values which have been
extracted from the consolidated statement of financial position
within the consolidated financial statements.
(7) Presents the assets held for sale which have been extracted
from the consolidated statement of financial position within the
consolidated financial statements.
(8) Presents the plant and equipment which have been extracted
from the consolidated statement of financial position within the
consolidated financial statements.
(9) Presents the intangible assets which have been extracted
from the consolidated statement of financial position within the
consolidated financial statements.
(10) Presents the loan to associates which has been extracted
from note 25 within the consolidated financial statements.
(11) Presents the total property value, which is the sum of
investment properties, assets held for sale, plant and equipment,
intangible assets and loan to associates.
(12) Presents the EPRA LTV which is net debt divided by total
property value in percentage.
Table E - Adjusted profit before tax and funds from
operations
Year ended Year ended
31 March 31 March
2023 2022
EURm EURm
------------------------------------------------------- ---------- ----------
Reported profit before tax (1) 87.0 168.9
Adjustments for:
Loss/(gain) on revaluation of investment properties(2) 9.8 (140.9)
Deficit on revaluation relating to leased investment
properties(3) (1.5) (5.6)
(Gain)/loss on disposals of properties(4) (4.7) 0.6
Recoveries from prior disposals of subsidiaries(5) - (0.1)
Loss/(gain) on revaluation of investment property
from associates and related tax(6) 0.1 (4.8)
Other adjusting items(7) 6.2 19.1
Goodwill impairment(8) - 40.9
Change in fair value of financial derivatives(9) (0.9) (1.0)
------------------------------------------------------- ---------- ----------
Adjusted profit before tax (10) 96.0 77.1
Adjustments for:
Foreign exchange effects(11) 0.2 (1.9)
Depreciation and amortisation (excluding depreciation
relating to IFRS 16)(12) 3.4 2.4
Amortisation of financing fees(13) 3.3 2.6
Adjustment in respect of IFRS 16(14) 2.2 0.5
Current taxes incurred(15) (3.0) (6.1)
------------------------------------------------------- ---------- ----------
Funds from operations (16) 102.1 74.6
------------------------------------------------------- ---------- ----------
Notes:
(1) Presents profit before tax which has been extracted from the
consolidated income statement within the consolidated financial
statements.
(2) Presents the gain or loss on revaluation of investment
properties which has been extracted from the consolidated income
statement within the consolidated financial statements.
(3) Presents the deficit on revaluation relating to leased
investment properties which has been extracted from note 14 within
the consolidated financial statements.
(4) Presents the gain or loss on disposal of properties which
has been extracted from the consolidated income statement within
the consolidated financial statements.
(5) Presents the recoveries from prior disposals of subsidiaries
which have been extracted from the consolidated income statement
within the consolidated financial statements.
(6) Presents the gain or loss on revaluation of investment
property relating to associates and related tax which has been
extracted from note 12 within the consolidated financial
statements.
(7) Presents the total adjusting items which have been extracted
from note 12 within the consolidated financial statements.
(8) Presents the goodwill impairment which has been extracted
from the consolidated income statement within the consolidated
financial statements.
(9) Presents the change in fair value of derivative financial
instruments which has been extracted from the consolidated income
statement within the consolidated financial statements.
(10) Presents the adjusted profit before tax for the year.
(11) Presents the net foreign exchange gains or losses as
included in other administration costs in note 7 within the
consolidated financial statements.
(12) Presents depreciation of plant and equipment and
amortisation of intangible assets which have been extracted from
note 7 within the consolidated financial statements.
(13) Presents amortisation of capitalised finance costs which
has been extracted from note 10 within the consolidated financial
statements.
(14) Presents the differential between the expense recorded in
the consolidated income statement for the year relating to head
leases in accordance with IFRS 16 amounting to EUR4.5m (2022:
EUR6.9m) and the actual cash expense recorded in the consolidated
statement of cash flows for the year amounting to EUR2.3m (2022:
EUR6.3m).
(15) Presents the total current income tax which has been
extracted from note 11 within the consolidated financial
statements.
(16) Presents the funds from operations for the year.
Glossary of terms
Adjusted earnings is the earnings attributable to the owners of the
after tax Company, adjusted for the effect of the gains/losses
on revaluation of investment properties and related
tax, (also to associates net of related tax), gains/losses
on disposal of properties and related tax, recoveries
from prior disposals of subsidiaries (net of related
tax), NCI relating to revaluation (net of related
tax), goodwill impairment, changes in fair value
of derivative financial instruments (net of related
tax and NCI), revaluation expense relating to leased
investment properties, adjusting items (net of related
tax and NCI)
---------------------- --------------------------------------------------------------
Adjusted net asset is the assets attributable to the owners of the
value Company adjusted for derivative financial instruments
at fair value and net deferred tax liabilities/assets
---------------------- --------------------------------------------------------------
Adjusted profit is the reported profit before tax adjusted for the
before tax effect of gains/losses on revaluation of investment
properties, deficit on revaluation relating to lease
investment properties, gains/losses on disposal
of properties, recoveries from prior disposals of
subsidiaries, gains/losses on revaluation of investment
property from associates and related tax, other
adjusting items, goodwill impairment and changes
in fair value of derivative financial instruments
---------------------- --------------------------------------------------------------
Annualised acquisition 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 31
March 2023. Annualised rent roll should not be interpreted
or used as a forecast or estimate. Annualised rent
roll differs from rental income described in note
5 of the Interim Report and reported within revenue
in the audited consolidated income statement for
reasons including:
* annualised rent roll represents contracted rental
income at a specific point in time expressed in
annual terms;
* rental income as reported within revenue represents
rental income recognised in the period under review;
and
* rental income as reported within revenue includes
accounting adjustments including those relating to
lease incentives
---------------------- --------------------------------------------------------------
Capital value is the market value of a property divided by the
total sqm of a property
---------------------- --------------------------------------------------------------
Company is Sirius Real Estate Limited, a company incorporated
in Guernsey and resident in the United Kingdom for
tax purposes, whose shares are publicly traded on
the Main Market of the London Stock Exchange (primary
listing) and the Main Board of the Johannesburg
Stock Exchange (primary listing)
---------------------- --------------------------------------------------------------
Cumulative total 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 for gains/losses on
revaluation of investment properties, gains/losses
on disposal of properties (net of related tax),
recoveries from prior disposals of subsidiaries
(net of related tax), refinancing costs, exit fees
and prepayment penalties, goodwill impairment, acquisition
costs in relation to business combinations, changes
in fair value of derivative financial instruments,
(collectively, the "EPRA earnings adjustments"),
deferred tax in respect of the EPRA earnings adjustments,
NCI relating to revaluation (net of related tax),
gains/losses on revaluation of investment property
relating to associates and the related tax thereon
---------------------- --------------------------------------------------------------
EPRA loan to value is the ratio of net debt to total property value
as defined in note 24. It includes all capital which
is not equity as debt, irrespective of its IFRS
classification, and is based upon proportional consolidation,
therefore including the Group's share in the net
debt and net assets of associates. Assets are included
at fair value, net debt at nominal value.
---------------------- --------------------------------------------------------------
EPRA net reinstatement is the net asset value after adjusting for derivative
value financial instruments at fair value, deferred tax
relating to valuation movements and derivative financial
instruments and real estate transfer tax presented
in the Valuation Certificate, including the amounts
of the above related to the investment in associates
---------------------- --------------------------------------------------------------
EPRA net tangible assets is the net asset value after adjusting for derivative financial
instruments at fair value,
deferred tax relating to valuation movements (just for the part of the
portfolio that the
Company intends to hold should be excluded) and derivative financial
instruments and intangible
assets as per the note reference in the audited consolidated statement
of financial position,
including the amounts of the above related to the investment in
associates. It also takes
into account the effect of the granting of shares relating to long-term
incentive plans
-------------------------------------------- ------------------------------------------------------------------------
EPRA net disposal value is the net asset value after adjusting for the fair value of fixed
interest rate debt, including
the amounts of the above related to the investment in associates
-------------------------------------------- ------------------------------------------------------------------------
EPRA net initial yield is the annualised rent roll based on the cash rents passing at reporting
date, less non-recoverable
property operating expenses, divided by the market value of the
property, increased with (estimated)
purchasers' costs
-------------------------------------------- ------------------------------------------------------------------------
EPRA net yield is the net operating income generated by a property expressed as a
percentage of its value
plus purchase costs
-------------------------------------------- ------------------------------------------------------------------------
ERV is the estimated rental value which is the annualised rental income at
100% occupancy
-------------------------------------------- ------------------------------------------------------------------------
Funds from operations is adjusted profit before tax adjusted for depreciation and amortisation
(excluding depreciation
relating to IFRS 16), amortisation of financing fees, net foreign
exchange differences, adjustment
in respect of IFRS 16 and current tax excluding tax on disposals
-------------------------------------------- ------------------------------------------------------------------------
Geared IRR is an estimate of the rate of return taking into consideration debt
-------------------------------------------- ------------------------------------------------------------------------
Gross loan to value ratio is the ratio of principal value of total debt to the aggregated value of
investment property
-------------------------------------------- ------------------------------------------------------------------------
Group comprises that of the Company and its subsidiaries
-------------------------------------------- ------------------------------------------------------------------------
Like for like refers to the manner in which metrics are subject to adjustment in order
to make them directly
comparable. Like-for-like adjustments are made in relation to annualised
rent roll, rate and
occupancy and eliminate the effect of asset acquisitions and disposals
that occur in the reporting
period
-------------------------------------------- ------------------------------------------------------------------------
Net loan to value ratio is the ratio of principal value of total debt less cash, excluding that
which is restricted
in contractual terms, to the aggregate value of investment property
-------------------------------------------- ------------------------------------------------------------------------
Net operating income is the rental, service charge and other income generated from investment
and managed properties
less directly attributable costs
-------------------------------------------- ------------------------------------------------------------------------
Net yield is the net operating income generated by a property expressed as a
percentage of its value
-------------------------------------------- ------------------------------------------------------------------------
Occupancy is the percentage of total lettable space occupied as at reporting date
-------------------------------------------- ------------------------------------------------------------------------
Operating cash flow on investment (geared) is an estimate of the rate of return based on operating cash flows and
taking into consideration
debt
-------------------------------------------- ------------------------------------------------------------------------
Operating cash flow on investment (ungeared) is an estimate of the rate of return based on operating cash flows
-------------------------------------------- ------------------------------------------------------------------------
Operating profit is the net operating income adjusted for gain on revaluation of
investment properties, gains/losses
on disposal of properties, recoveries from prior disposals of
subsidiaries, administrative
expenses and share of profit of associates
-------------------------------------------- ------------------------------------------------------------------------
Rate for the German portfolio is rental income per sqm expressed on a monthly
basis as at a specific
reporting date
for the UK portfolio is rental income (includes estimated service charge
element) per sqm
expressed on a monthly basis as at a specific reporting date in euro
for the UK portfolio is rental income (includes estimated service charge
element) per sq ft
expressed on an annual basis as at a specific reporting date in GBP
-------------------------------------------- ------------------------------------------------------------------------
Senior Management Team as set out on page 88 of the Group's Annual Report and Accounts 2023
-------------------------------------------- ------------------------------------------------------------------------
Sirius comprises that of the Company and its subsidiaries
-------------------------------------------- ------------------------------------------------------------------------
Total debt is the aggregate amount of the interest-bearing loans and borrowings
-------------------------------------------- ------------------------------------------------------------------------
Total shareholder accounting return is the return obtained by a shareholder calculated by combining both
movements in adjusted
NAV per share and dividends paid
-------------------------------------------- ------------------------------------------------------------------------
Total return is the return for a set period of time combining valuation movement and
income generated
-------------------------------------------- ------------------------------------------------------------------------
Ungeared IRR is an estimate of the rate of return
-------------------------------------------- ------------------------------------------------------------------------
Weighted average cost of debt is the weighted effective rate of interest of loan facilities expressed
as a percentage
-------------------------------------------- ------------------------------------------------------------------------
Weighted average debt expiry is the weighted average time to repayment of loan facilities expressed
in years
-------------------------------------------- ------------------------------------------------------------------------
Corporate directory
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
Registered office
Elizabeth House
Les Ruettes Brayes
St Peter Port
Guernsey GY1 1EW
Channel Islands
Registered number
Incorporated in Guernsey under The Companies (Guernsey) Law,
2008, as amended, under number 46442
Company Secretary
A Gallagher
Sirius Real Estate Limited
Elizabeth House
Les Ruettes Brayes
St Peter Port
Guernsey GY1 1EW
Channel Islands
UK solicitors
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
United Kingdom
Financial PR
FTI Consulting LLP
200 Aldersgate Street
London EC1A 4HD
United Kingdom
JSE sponsor
PSG Capital Proprietary Limited
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch 7600
South Africa
Joint broker
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
United Kingdom
Joint broker
Berenberg
60 Threadneedle Street
London EC2R 8HP
United Kingdom
Property valuer
Cushman & Wakefield LLP
Rathenauplatz 1
60313 Frankfurt am Main
Germany
Independent auditor
Ernst & Young LLP
PO Box 9, Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey GY1 4AF
Channel Islands
Guernsey solicitors
Carey Olsen (Guernsey) LLP
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Channel Islands
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