TIDMSRE
RNS Number : 0875G
Sirius Real Estate Limited
23 November 2020
23 November 2020
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius" or the "Company")
Condensed consolidated financial results* for the six months
ended 30 September 2020
Resilient trading, strong cash collection driving FFO growth and
underpinning dividend increase
Sirius Real Estate, the leading operator of branded business
parks providing conventional space and flexible workspace in
Germany, today announces its half year results for the six months
ended 30 September 2020.
HIGHLIGHTS
-- 7.4% growth in funds from operations to EUR29.1 million (H1 2019: EUR27.1 million)
-- 97.3% cash (rent and service charge) collection rate with
EUR1.9 million outstanding for the period and similar collection
rates already seen in the second half
-- Profit before tax of EUR62.2 million (H1 2019: EUR79.7
million) which when adjusted for valuation gains of EUR33.5 million
(H1 2019: EUR58.2 million) shows a 33.4% increase in underlying
profitability
-- 2.8%1 increase in 1.5x covered dividend per share to 1.82c (H1 2019: 1.77c)
-- 4.3% increase in investment property valuation and book value
of EUR1,229.7 million (31 March 2020: EUR1,179.4 million)
-- 5.0% growth in NAV per share to 81.18c (31 March 2020: 77.35c)
-- Total enquiries up 17.4% on H1 2019 with strong momentum
carried into the second half. Sales conversion rate remained robust
at 13.4%
-- Acquisition of industrial and office park in Norderstedt for
EUR9.1 million agreed in September and due to complete in December
2020
-- Net LTV2 of 31.6% (31 March 2020: 32.8%) following the draw
down of the last tranche of the EUR50.0 million unsecured
Schuldschein debt which has a blended interest rate of 1.60%, an
average maturity of 3.2 years and no amortisation
-- Total cash balances of EUR128.4 million including EUR112.4
million of which is unrestricted providing significant firepower
for strong pipeline of acquisitions
-- Awarded AA MSCI ESG Rating in October 2020
1 Interim dividend representing 65% of FFO (H1 2019: 67% of FFO).
2 Includes unrestricted cash balances.
Andrew Coombs, Chief Executive Officer of Sirius Real Estate,
said: "In what has been an unprecedented year with the COVID-19
pandemic causing widespread disruption to businesses the world
over, Sirius' strong first half results are all the more
impressive. A combination of the quality and appeal of our assets
to tenants, the ongoing operational excellence of our team and its
fast response to the crisis, as well as business confidence in the
robust and efficient way in which the German government has dealt
with the pandemic, have allowed us to deliver year-on-year growth
across our key operating metrics and maintain high cash collection
rates. However, while the recent news of the potential vaccine has
provided some much needed light at the end of the tunnel, we are
not out of the woods yet and much uncertainty about the speed of
any recovery remains. Nevertheless, I take great confidence from
the fact that the wide range of competitively priced flexible and
traditional office, storage, as well as industrial and
manufacturing spaces we offer will continue to appeal to our
growing customer base and drive income growth.
"Looking ahead we have a strong cash position and other liquid
resources available to deploy into our healthy pipeline of
opportunities as the investment markets begin to open up.
Additionally, they allow us to continue to execute our disciplined
capital expenditure and asset management programmes, which have
delivered highly attractive returns over the years, in order to
unlock the potential of our value add assets which comprise just
over half of our EUR1.2 billion portfolio. Through organic and
acquisitive growth we believe there is an opportunity to grow our
funds from operations over the next few years, which should support
a growing dividend."
For further information:
Sirius Real Estate
Andrew Coombs, CEO
Alistair Marks, CFO
+49 (0) 30 285010110
FTI Consulting (financial PR)
Richard Sunderland/ Claire Turvey/ Talia Jessener
(+44) 020 3727 1000
SiriusRealEstate@fticonsulting.com
NOTES TO EDITORS
About Sirius Real Estate
Sirius is a property company listed on the main market and
premium segment of the London Stock Exchange and the Main Board of
the Johannesburg Stock Exchange. It is a leading operator of
branded business parks providing conventional space and flexible
workspace in Germany. The Company's core strategy is the
acquisition of business parks at attractive yields, the integration
of these business parks into its network of sites under the
Company's own name as well as offering a range of branded products
within those sites, and the reconfiguration and upgrade of existing
and vacant space to appeal to the local market, through intensive
asset management and investment. The Company's strategy aims to
deliver attractive returns for shareholders by increasing rental
income and improving cost recoveries and capital values, as well as
by enhancing those returns through financing its assets on
favourable terms. Once sites are mature and net income and values
have been optimised, the Company may take the opportunity to
refinance the sites to release capital for investment in new sites
or consider the disposal of sites in order to recycle equity into
assets which present greater opportunity for the asset management
skills of the Company's team.
Sirius also has a venture with clients represented by AXA
Investment Managers - Real Assets. Titanium was formed through the
acquisition by AXA Investment Managers - Real Assets, on behalf of
its clients, from Sirius, of a 65% stake in five business parks
across Germany. Sirius retained the remaining 35%. The venture
seeks to grow primarily through the acquisition of larger
stabilised business park assets and portfolios of assets with
strong tenant profiles and occupancy. As well as its equity
interest, Sirius acts as operator of the assets in the venture, on
a fee basis. Sirius will continue to grow its wholly owned
portfolio through acquisitions of more opportunistic assets, where
it can capitalise on its asset management expertise to maximise
utilisation of the space, grow occupancy and improve quality of the
tenants. The strategies have been clearly defined so that the
venture does not conflict with Sirius's existing business.
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
Business update
Resilient trading and recovering markets
In summary:
-- Resilient trading performance despite the impact of Covid-19 and expected move-outs
-- Profit before tax of EUR62.2 million compared to EUR79.7 million in the same period last year
-- 7.4% increase in funds from operations ("FFO") to EUR29.1
million from EUR27.1 million in the same period last year
-- 97.3% cash collection (rent and service charge excluding VAT) performance
-- Dividend of 1.82c declared, 1.6 times covered by FFO
-- Resumption of transactional activity in September with the
notarisation of a business park located in Norderstedt for EUR9.1
million and strong pipeline
-- Significant cash resources available with EUR112.4 million of
unrestricted cash on balance sheet and net LTV of 31.6%
Overview
Sirius has had an encouraging six month trading period,
recording increases in funds from operations and a 4.3%
like-for-like increase in the valuation of its investment property.
Despite the unique challenges of Covid-19, Sirius was able to
achieve a 97.3% cash collection rate in the period whilst
maintaining occupancy and annualised rent roll. This highlights the
resilience of the Sirius business model, the appeal of our assets
to tenants and the tenacity of our employees. The Company
strengthened its balance sheet in the period with the drawdown of
the final tranche of its unsecured Schuldschein facility and, at
period end, had a net LTV of 31.6%.
This robust performance has led Sirius to declare a 2.8%
increase in dividend for the six months ended 30 September 2020 to
1.82c representing 65% of the FFO compared to the dividend paid for
the same period in the prior year, which was based on 67% of
FFO.
Whilst uncertainty continues, the depth and scale of the
economic and fiscal response of the German government to the
Covid-19 outbreak to date has been decisive and far reaching. With
a massive Covid-19 recovery stimulus announced in June 2020,
Germany, thus far, has gone further and committed more resource
than its European neighbours in addressing the challenges of the
pandemic. State support has been wide ranging and includes grants,
loans and subsidies aimed directly at maintaining employment
("Kurzarbeit") as well as a variety of other measures aimed at
supporting businesses of all sizes and across all industries. With
the formal announcement of the extension of the existing Kurzarbeit
scheme to 31 December 2021, the message from the German government
is that it is fully committed to supporting business for as long as
necessary.
Financial performance
The Company reported a profit before tax for the six month
period ended 30 September 2020 of EUR62.2 million (30 September
2019: EUR79.7 million) including EUR33.5 million of net gains (30
September 2019: EUR58.2 million) from owned property revaluations
(net of capex and adjustments in relation to lease incentives and
broker fees). Total revenue, which comprises rent, fee income from
Titanium, other income from investment properties and service
charge income, increased by 9.8% to EUR79.3 million (30 September
2019: EUR72.2 million). Total annualised rent roll decreased to
EUR89.2 million from EUR90.3 million at 31 March 2020 which is
predominantly due to losing EUR0.7 million per annum from the sale
of the Weilimdorf asset at the start of the period.
FFO for the six months grew to EUR29.1 million (2.80c per share)
compared to EUR27.1 million (2.65c per share) for the same period
in the prior year, an increase of 5.7% on a per share basis.
Earnings of EUR56.6 million and 5.45c per share decreased by 20.6%,
reflecting the exceptionally strong valuation gains of EUR69.9
million recorded in the prior period. Adjusted EPS, which excludes
valuation movements as well as exceptional items, increased 8.8% to
2.73c per share from 2.51c per share highlighting the positive
operational performance in the period. The following table sets out
the key earnings per share metrics:
Table 1: Earnings per share
30
30 Sept 30 Sept 30 Sept Sept
2020 2020 2019 2019
earnings 30 Sept 2020 cents earnings 30 Sept 2019 cents
per Change
EUR000 no. of shares per share EUR000 no. of shares share %
---------- -------- -------------- --------- -------- ------------- ------ -------
Basic EPS 56,549 1,037,394,967 5.45 70,216 1,023,014,308 6.86 (20.6)%
Diluted
EPS 56,549 1,053,039,717 5.37 70,216 1,034,854,308 6.78 (20.8)%
Adjusted
EPS 28,322 1,037,394,967 2.73 25,757 1,023,014,308 2.51 8.8%
Basic
EPRA EPS 28,326 1,037,394,967 2.73 24,921 1,023,014,308 2.44 11.9%
Diluted
EPRA EPS 28,326 1,053,039,717 2.69 24,921 1,034,854,308 2.41 11.6%
---------- -------- -------------- --------- -------- ------------- ------ -------
The Directors have chosen to disclose EPRA earnings, which are
widely used alternative metrics to their IFRS equivalents (further
details on EPRA best practice recommendations can be found at
www.epra.com). Refer to note 2(c) for further information.
With the investment market slowing down and the Company adopting
a cautious approach to transactions over the last six months there
was no contribution from acquisitions in the period under review.
However, with the Norderstedt asset scheduled for completion in
December, EUR112.4 million of unrestricted cash resources available
and assuming markets continuing their recent trend back towards
normality, the contribution of acquisitions in the second half of
the financial year is expected to be more meaningful.
Net asset value per share ("NAV") increased by 5.0% to 81.18c
(31 March 2020: 77.35c) in the period whilst adjusted net asset
value per share ("adjusted NAV") increased by 5.2% to 85.81c (31
March 2020: 81.54c). Following the introduction of new EPRA net
asset metrics effective for reporting periods beginning 1 January
2020, the Company has chosen to disclose EPRA net tangible assets
("EPRA NTA") which adds back deferred tax and financial derivatives
including that relating to investments in associates, excludes
goodwill and intangible assets and is calculated after taking into
consideration the effect of share incentive plans on the number of
shares in issue. Further details relating to EPRA net asset metrics
can be found in note 11 of the Interim Report. In the period under
review EPRA NTA increased by 4.9% to 84.42c (31 March 2020:
80.44c). The main driver of the increases to net asset value was
the valuation uplift as much of the recurring profit before tax was
offset by the dividend payment in the period. The valuation metrics
are described in more detail below and the movement in net asset
value in the period can be seen in the following table:
Table 2: Net assets per share
cents
per share
------------------------------------------ ----------
NAV as at 31 March 2020 77.35
------------------------------------------ ----------
Recurring profit after tax 2.73
Surplus on revaluation 3.22
Deferred tax charge (0.45)
Scrip and cash dividend paid (1.73)
Adjusting items 0.06
------------------------------------------ ----------
NAV per share as at 30 September 2020 81.18
------------------------------------------ ----------
Deferred tax and adjustments to financial
derivatives* 4.63
------------------------------------------ ----------
Adjusted NAV per share as at 30 September
2020 85.81
------------------------------------------ ----------
EPRA adjustments* (1.39)
------------------------------------------ ----------
EPRA NTA per share as at 30 September
2020 84.42
------------------------------------------ ----------
* See note 11 of the Interim Report.
Lettings and rent roll development
Total annualised rent roll of EUR89.2 million reduced by EUR1.1
million since the year end, which was primarily attributable to the
sale of the Weilimdorf asset on 1 April 2020 which generated EUR0.7
million of annualised rent roll. Encouragingly, despite the impact
of Covid-19 and two large expected move-outs amounting to more than
18,500 sqm which generated annualised rent roll of EUR1.5 million,
like-for-like annualised rent roll saw only a modest decrease of
0.4% to EUR89.2 million from EUR89.6 million. Total move-ins of
68,606 sqm generated EUR5.5 million in annualised rent roll at an
average rate of EUR6.66 per sqm, higher than the EUR6.37 psqm
average across the total move-outs, where EUR6.7 million of
annualised rent roll was generated across 87,033 sqm. Total
occupancy remained high at 83.9% but slightly below the 85.3% at 31
March 2020, while the like-for-like average rate increased by 1.1%
to EUR6.03 psqm from EUR5.96 psqm. The movement in annualised rent
roll is described in more detail below:
EUR'm
--------------------------------------- -----
Annualised rent roll 31 March 2020 90.3
Disposals (0.7)
Move-outs (6.7)
Move-ins 5.5
Contracted uplifts 0.8
--------------------------------------- -----
Annualised rent roll 30 September 2020 89.2
--------------------------------------- -----
Sirius reported an increase in enquiry levels of 17.4% compared
to the same period in the last year with a total of 8,284 enquiries
generated, which, given the restrictions encountered over the
period, represents a significant achievement. Analysis of enquiry
data confirmed a marked increase in the number of enquiries for
commercial and self-storage space which combined makes up 36% of
the Company's total lettable area. The monthly development of
enquiries compared to the prior year is detailed in the table
below:
Table 3: Enquiries
No. of
enquiries No. of enquiries
6 months 6 months
to Sept to Sept Change
2019 2020 %
---------- ---------- ---------------- ------
April 1,099 1,202 9.4%
May 1,188 1,248 5.1%
June 1,181 1,368 15.8%
July 1,392 1,367 (1.8)%
August 1,242 1,477 18.9%
September 952 1,622 70.4%
---------- ---------- ---------------- ------
Total 7,054 8,284 17.4%
---------- ---------- ---------------- ------
What was most encouraging was that over this first half year, in
spite of all the challenges of completing deals during lockdown,
the Company was still able to achieve an average conversion ratio
(enquiries to new lettings) of 13.4%, only slightly down from 14.7%
for the same period in the prior year. The Company's lettings
conversion ratio did fall to just under 10% in April following the
immediate impact of the Covid-19 outbreak; however, this picked up
considerably once the main restrictions were lifted in Germany in
June.
Whilst the six months to September 2020 saw a greater number of
deals agreed the volume of square metres decreased by 11.0% or
9,184 sqm compared to the same period in the prior year and the
average deal size reduced from 80 sqm to 67 sqm. The new lettings
in the period comprised a mixture of large long-term and smaller
flexible lettings across office, storage and production spaces.
Details of letting numbers and square metre volumes compared to the
same period in the previous year are set out in the table
below:
Table 4: Lettings
sqm Average Average
New lettings New lettings sqm six months sqm six sqm six
six months six months six months to Sept months to months to
to Sept 2019 to Sept 2020 to Sept 2019 2020 Sept 2019 Sept 2020
---------- ------------- ------------- ------------- ----------- ---------- ----------
April 87 115 12,353 8,025 142 70
May 174 130 11,873 11,282 68 87
June 201 165 13,276 11,242 66 68
July 224 215 11,351 13,170 51 61
August 127 259 16,065 15,324 126 59
September 222 226 18,361 15,052 83 67
---------- ------------- ------------- ------------- ----------- ---------- ----------
Total 1,035 1,110 83,279 74,095 80 67
---------- ------------- ------------- ------------- ----------- ---------- ----------
Tenant retention in the period was encouraging with 68% of
square metres up for renewal in the period being successfully
extended (H1 2019: 70%) representing a strong performance given the
economic environment during the period.
Overall, the consistency in renewals, high volumes of enquiries
and robust sales conversion levels provide a clear demonstration of
the ability of the Company's internal operating platform to perform
in challenging market conditions. Furthermore, with a variety of
spaces and a wide range of products the Company is well placed to
continue meeting the changing demands of tenants as businesses and
landlords adapt to the challenges presented.
Cash collection
Cash collection has taken on additional importance this year as
the Covid-19 crisis has developed. Sirius benefits from an
experienced and professional in-house cash collection team which,
together with onsite staff, was quick to react to the pandemic and,
as a result, has been able to work closely with tenants in managing
debt in the period. Unlike many other companies which invoice
tenants for future periods, Sirius invoices on the first working
day of each month resulting in a monthly billing and collection
cycle. The Group's cash collection performance in the six month
period to 30 September 2020 relating to rent and service charge
prepayments (excluding VAT) is detailed in the following table:
Table 5: H1 Cash collection
Invoiced Outstanding Collection
EUR'000 EUR'000 %
---------- -------- ----------- ----------
April 11,621 227 98.0%
May 11,635 352 97.0%
June 11,716 338 97.1%
July 11,676 241 97.9%
August 11,883 270 97.7%
September 12,015 471 96.1%
---------- -------- ----------- ----------
Total 70,546 1,899 97.3%
---------- -------- ----------- ----------
Out of total billing of EUR70.5 million, uncollected debt for
the six month period amounted to EUR1.9 million (excluding VAT)
representing a cash collection rate of 97.3% with outstanding rent
of EUR1.4 million and service charge prepayments of EUR0.5 million.
From a tenant base of over 5,000 tenants as at 30 September 2020
the Group had issued eleven deferred payment plans to tenants
adversely impacted by Covid-19 which accounts for EUR0.3 million of
the outstanding amount. The deferred payment plans spread the
payment of rent and service charge prepayments over an average of
eight months. As at period end all plans were being fully complied
with. Provisions relating to these outstanding rents and service
charge payments in the statement of comprehensive income amounted
to EUR0.9 million. The Company expects to collect the majority of
the outstanding debt for the period over the next twelve months
through its regular debt collection activities.
One of the factors supporting the Company's cash collection
success is its diversified tenant base and range of products. As at
30 September 2020 the Company had a total of 5,115 tenants with its
top 50 tenants representing 42% of annualised rent roll, its SME
tenants representing 52% and its retail customers 6%. The Company's
top tenant represents 2.7% of annualised rent roll with government
tenants representing 7.6%. The Company has a wide range of spaces
including office (31.9%), storage (32.6%) and production (21.8%).
In addition, 6.3% of the Company's space relates to high-yielding
and flexible Smartspace products, more detail on which follows
later in this report. The large number of tenants, broad mix of
spaces and range of products illustrate a balanced and
well-constructed tenant portfolio that includes a range of
industries and risk profiles.
Portfolio valuation
Demand from investors for industrial and office business parks
in Germany returned strongly following a brief hiatus after the
immediate outbreak of Covid-19. Both domestic and foreign sources
of capital continue to compete for assets attracted by the
high-yielding nature and growth potential of the asset class.
Whilst yield movement has been a key feature of valuation
development, the upgrading and repositioning of assets through our
capital investment programmes and the resulting organic rental
growth continue to be a major focus and driver of value for the
Company.
The owned investment property portfolio was independently valued
by Cushman & Wakefield LLP at EUR1,229.7 million (31 March
2020: EUR1,189.5 million*), which converts to a book value of
EUR1,225.5 million (31 March 2020: EUR1,176.1 million) after
allowing for the provision for lease incentives. Leased investment
properties amounted to EUR17.7 million (31 March 2020: EUR17.8
million).
* Including assets held for sale of EUR10.1 million.
Table 6: Reconciliation of market value to book value
30 September 31 March
2020 2020
EURm EURm
-------------------------------- ------------ --------
Owned investment properties at
market value 1,229.7 1,179.4
Adjustment in respect of lease
incentives (4.2) (3.3)
Leased investment properties at
market value 17.7 17.8
-------------------------------- ------------ --------
Book value as at period end 1,243.2 1,193.9
-------------------------------- ------------ --------
The valuation uplift for the period relating to owned investment
properties was EUR50.3 million (excluding assets held for sale)
resulting in a net valuation gain of EUR34.4 million after taking
into account EUR15.9 million of capital expenditure and adjustments
for broker fees. The gain on revaluation on investment properties
recorded in the consolidated statement of comprehensive income,
which also adjusts for lease incentives and deficit on revaluation
relating to leased assets, was EUR31.9 million. The valuation of
the portfolio by Cushman & Wakefield for the six months ended
31 March 2020 was disclosed on the basis of "material uncertainty"
due to Covid-19; however, this was lifted in August 2020 resulting
in the valuation for 30 September 2020 being conducted on a
normalised basis. The valuation increase compared to 31 March 2020
was attributable to 34 bps of gross yield compression reflecting
the way in which markets in Germany have recovered as well as the
continued attractiveness of the asset class amongst income and
capital growth focused investors. The increase in like-for-like
valuation compared to September 2019, the last period which was not
subject to the "material uncertainty" clause, was EUR72.1 million
and attributable to an increase in annualised rent roll of EUR3.6
million together with 15 bps of gross yield compression. The gross
yield of the portfolio at 30 September 2020 was 7.3% (31 March
2020: 7.6%).
As at 30 September 2020, the portfolio of owned properties,
which excludes managed properties and those within the Titanium
Venture, comprised 56 assets, with total lettable space of 1.5
million sqm. The movement in book value for the period for these
properties can be reconciled as follows:
Table 7: Movement in book value in the period
Investment property - owned Investment property - leased Investment property - total
EUR000 EUR000 EUR000
----------------------------- --------------------------- ----------------------------- ---------------------------
Investment properties at book
value as at 31 March 2020(*) 1,186,183 1 7,832 1,204,015
Additions - 1,519 1,519
Capex investment and
capitalised broker fees 15,920 - 15,920
Disposals (10,100) - (10,100)
Surplus on revaluation above
capex investment and broker
fees 34,379 - 34,379
Deficit on revaluation
relating to leased
investment properties - (1,617) (1,617)
Adjustment in respect of
lease incentives (853) - (853)
----------------------------- --------------------------- ----------------------------- ---------------------------
Investment properties at book
value as at 30 September
2020 1,225,529 17,734 1,243,263
----------------------------- --------------------------- ----------------------------- ---------------------------
* Including assets held for sale of EUR10.1 million.
As can be seen from the table above, the EUR50.3 million or 4.3%
increase in valuation of owned investment property more than
offsets the impact of the sale of the Weilimdorf asset and capex
investment in the period and as a result the owned investment
property book value was EUR1,225.5 million (31 March 2020:
EUR1,186.2 million).
The Company's leased investment properties are subject to an
internal valuation based on discounted cash flows. Leased property
primarily relates to an operating and management agreement on a
property located in Munich that it sold in a sale-and-leaseback
transaction in 2017. As at 30 September 2020 the remaining lease
term was 2.5 years. During the period a lease extension of a second
operating and management agreement on an asset located in Essen
resulted in EUR1.5 million of additions being recorded. The deficit
on revaluation relating to leased investment properties of EUR1.6
million recorded in the period represents the valuation relating to
the lease extension and amortisation of the capitalised lease with
the corresponding expense recorded within the gain on revaluation
of investment properties in the statement of comprehensive
income.
The total owned portfolio now comprises value-add assets which
make up 57% of the total value and mature assets that account for
43%. The mature assets, with occupancy of 95.2%, have typically
been owned for a number of years and have been subject to intensive
asset management and investment. Whilst the potential for income
and value creation reduces when assets reach maturity, some
opportunity does remain and these assets also help support the
highly competitive loan facilities that Sirius has been able to
secure in recent years.
Table 8: Book value valuation metrics
Annualised
rent Book Rate
roll value NOI Capital Vacant psm Occupancy
Gross Net space
EURm EURm EURm value/sqm yield yield sqm EUR %
-------------- ---------- ------- ----- --------- ------ ------ -------- ---- ---------
Value-add
assets 53.7 703.7 46.0 699 7.6% 6.5% 213,449 5.87 78.1%
Mature assets 35.5 521.9 32.6 1,012 6.8% 6.3% 23,859 6.28 95.2%
Other - - (1.0) - - - - - -
-------------- ---------- ------- ----- --------- ------ ------ -------- ---- ---------
Total 89.2 1,225.5 77.6 805 7.3% 6.3% 237,308 6.03 83.9%
-------------- ---------- ------- ----- --------- ------ ------ -------- ---- ---------
The value-add assets, with 78.1% occupancy and valued at a gross
yield of 7.6%, provide much of the opportunity for future value and
income creation. With total vacant space amounting to 213,449 sqm
and 84,765 sqm of this space being subject to the Company's capex
investment programmes, Sirius intends to continue investing in
organic growth as it has successfully done in recent years.
Capex investment programmes
During the period the Group continued to upgrade and transform
its assets through its capex investment programmes. The Company's
ability to understand and react to demand in micro markets and to
generate high levels of enquiries provides a strategic advantage
and confidence to develop space. In the six month period under
review work continued across both of the Group's capex investment
programmes which together made a strong contribution to overall
Company performance.
The original capex investment programme, covering over 200,000
sqm of space, is substantially complete and, with an annual return
on cost in excess of 50%, continues to generate incremental value
as improvements in occupancy and rate are achieved. For further
details of the original capex investment programme, please refer to
the business analysis section of this report.
Whilst the original capex investment programme was based on all
assets acquired prior to April 2016 the new acquisition capex
investment programme applies to all assets acquired since April
2016. The programme now includes 26 sites and a total of 171,161
sqm of sub-optimal vacant space. The budgeted investment of EUR42.1
million on this space is expected to generate annualised rent roll
of EUR12.3 million at 82% occupancy. Importantly, due to the extent
of transformation and upgrading work within this programme, the
impact on valuation has been and is expected to continue to be
significant. Steady progress has been made on the new acquisition
capex investment programme with a total of 127,895 sqm of space
fully converted at 30 September 2020. An investment of EUR25.0
million in this space is generating annualised rent roll of EUR8.0
million on occupancy of 71% whilst the remaining vacant space of
37,090 sqm is being marketed for letting and expected to require an
additional EUR1.4 million investment. When budgeted occupancy and
rental rate is achieved a further EUR1.4 million of annualised
rental income as well as further increases in valuation are
expected from this space.
In addition to the completed space, a total of 43,266 sqm of
space is either in progress or awaiting approval to commence. A
further EUR11.9 million is expected to be invested in this space,
on top of the EUR1.8 million already spent, and, based on achieving
budgeted occupancy, incremental annualised rent roll in the region
of EUR2.8 million is expected to be generated, also with further
valuation increases.
Further details on the new acquisition capex investment
programme are set out in the table below:
Table 9: New acquisition capex investment programme
Annualised
rent
roll Rate
per
Annualised increase sqm
rent achieved achieved
roll to Occupancy Rate to
New acquisition achieved per
capex Investment Actual increase September to sqm September
investment budgeted spend budgeted 2020 Occupancy September budgeted 2020
programme
progress sqm EURm EURm EURm EURm budgeted 2020 EUR EUR
---------------- ------- ---------- ------ ---------- ---------- --------- --------- -------- ---------
Completed 127,895 28.4 25.0 9.4 8.0 82% 71% 7.49 7.33
In progress 19,080 4.8 1.8 1.2 0.1 83% - 6.49 -
To commence
in next
financial
year 24,186 8.9 - 1.7 - 81% - 7.10 -
---------------- ------- ---------- ------ ---------- ---------- --------- --------- -------- ---------
Total 171,161 42.1 26.8 12.3 8.1 82% - 7.32 -
---------------- ------- ---------- ------ ---------- ---------- --------- --------- -------- ---------
Whilst the volume of square metres added to the new acquisition
capex investment programme in the six month period to 30 September
2020 was limited due to lack of acquisition activity, the return of
transactional activity with a focus on assets with sub-optimal
vacancy is expected to provide opportunity to grow the capex
investment programme going forward.
The Company continues to look for value-add opportunities within
the existing portfolio by upgrading spaces returned each year as a
result of move-outs. Approximately 38,000 sqm of sub-optimal
quality space has been identified for investment within the current
vacancy, which was either vacated within the period or the previous
financial year. The upgrading of this space is expected to require
an investment of EUR9.9 million and generate EUR2.9 million in
annualised rent roll, representing an uplift of approximately 20%
on the rate at which the space was previously let.
The capex investment programmes combined with vacated space
suitable for investment as described above account for
approximately one-third of the total vacant space of 237,308 sqm.
With structural vacancy of 2% the remaining lettable vacancy is
119,141 sqm. Further details on vacancy and related investment and
estimated rental values are detailed in the table below:
Table 10: Vacancy summary
% of total
space Sqm Capex (EURm) ERV (EURm)
---------------------------- ---------- ------- ------------ ----------
Structural vacancy 2% 33,402 - -
Lettable vacancy 8% 119,141 - 8.1
Capex investment programmes 6% 84,765 23.8 7.2
---------------------------- ---------- ------- ------------ ----------
Total 16% 237,308 23.8 15.3
---------------------------- ---------- ------- ------------ ----------
Sirius continues to focus on acquiring assets with vacancy as
well as investing in and upgrading space vacated through tenant
churn, thereby allowing the Company to refuel its capex investment
programmes.
Asset recycling, acquisitions and disposals
As expected, the transactional market in Germany significantly
contracted in the second and third quarters of the calendar year
with those transactions completing representing deals that had been
agreed prior to the Covid-19 outbreak. However, as time has
progressed, transaction volumes have increased with many
commentators predicting a busy period ahead as markets recover and
investor confidence returns. The Company chose to take a
conservative approach in the six month period under review focusing
on trading throughout the Covid-19 period whilst strengthening its
balance sheet in order to position itself to take advantage of
opportunities as they arise going forward.
The reduction in transactional activity also provided the
Company with the opportunity to focus its efforts on developing its
relationships with the agent and broker community. The Company held
a total of 16 socially distanced events throughout the country
enabling constructive exchange with the investment and lettings
agents that resulted in an increase in the number of opportunities
provided by these channels.
In September 2020 the Company notarised the acquisition of the
Norderstedt asset in close proximity to Hamburg International
Airport and Hamburg Hafen, the pre-eminent German port. This
mixed-use asset is fully let to twelve tenants, generates
EUR783,000 of annualised rent roll and provides operational
synergies with the Company's three other assets in and around
Hamburg. Whilst the asset provides attractive day-one income as a
result of an initial gross yield of 8.6%, further opportunity
exists through reversion relating to vacating tenants and the
possibility to increase lease lengths.
The Company's pipeline of opportunities is strong, both for its
own balance sheet and the Titanium Venture with AXA Investment
Managers - Real Assets, and it is currently in exclusivity on a
number of properties.
The key details of the asset notarised in the period as well as
the assets in exclusivity can be seen within the table below:
Table 11: Notarised acquisitions
Total Acquisition
investment non-
(incl. Annualised recoverable Acquisition Annualised
acquisition Total Acquisition acquisition service maintenance acquisition
charge EPRA
costs) acquisition Acquisition vacant rent roll costs costs NOI net
initial
Acquisitions EUR000 sqm occupancy sqm EUR000 EUR000 EUR000 EUR yield
------------- ----------- ------------ ----------- ----------- ----------- ----------- ----------- ------------ -------
Norderstedt 9,059 12,626 100% - 783 (85) (5) 693 7.6%
------------- ----------- ------------ ----------- ----------- ----------- ----------- ----------- ------------ -------
Total 9,059 12,626 100% - 783 (85) (5) 693 7.6%
------------- ----------- ------------ ----------- ----------- ----------- ----------- ----------- ------------ -------
In addition, the Company completed the disposal of the
Weilimdorf asset in April 2020. The asset, an office building let
to a single tenant operating within the car manufacturing industry,
was sold for total proceeds of EUR10.1 million, representing an
EPRA net initial yield including estimated purchasers' costs of
6.3% and 11% premium to book value at date of notarisation.
Smartspace
The Smartspace range of products continues to provide Sirius
with the ability to create income and significant value from
challenging space within the portfolio that other operators often
regard as structural vacancy. The Smartspace products are designed
with tenant flexibility in mind at a fixed cost which has proven to
be particularly desirable in a period of significant economic and
real estate sector change where flexibility and cost certainty has
become a key tenant priority.
Total Smartspace in the Sirius-owned portfolio now stands at
85,845 sqm across five products and generates EUR5.8 million of
annualised rent roll equating to 6.5% of the Company's total
annualised rent roll. An additional 4,087 sqm of Smartspace was
created in the period predominantly on workboxes and storage space,
which have both seen a marked increase in demand since the Covid-19
outbreak.
At the beginning of the period under review the Company launched
its fourth five-star serviced office product, First Choice Business
Centre ("FCBC"), located in Hallbergmoos, in close proximity to
Munich Airport. Due to the Covid-19 outbreak airport traffic is
significantly down, resulting in the opening and performance of the
FCBC Hallbergmoos being slower than expected. The Company remains
confident that demand in this area will return and that this
business centre will be successful. Excluding Hallbergmoos, FCBC
occupancy increased to 68.0% as at 30 September 2020 (30 September
2019: 61.6%).
The table below shows how Smartspace products contribute to the
portfolio as a whole:
Table 12: Smartspace
Annualised
rent % of Rate
roll total per sqm
(excl. (excl.
service Smartspace service
Total Occupied Occupancy charge) annualised charge)
Smartspace product rent
type sqm sqm % EUR roll EUR
------------------- ------ -------- --------- ---------- ---------- --------
First Choice
Office 4,399 1,822 41% 432,000 7% 19.78
SMSP Office 29,076 22,358 77% 2,402,000 42% 8.95
SMSP Workbox 6,997 5,727 82% 392,000 7% 5.70
SMSP Storage 38,350 28,010 73% 2,325,000 40% 6.92
------------------- ------ -------- --------- ---------- ---------- --------
SMSP subtotal 78,822 57,917 73% 5,551,000 96% 7.99
------------------- ------ -------- --------- ---------- ---------- --------
SMSP Flexilager 7,023 2,529 36% 214,000 4% 7.06
------------------- ------ -------- --------- ---------- ---------- --------
SMSP total 85,845 60,446 70% 5,765,000 100% 7.95
------------------- ------ -------- --------- ---------- ---------- --------
Financing and loan to value
The Company continues to search for ways to improve its future
financing through unsecured debt whilst optimising its existing
debt. In the six month period to 30 September 2020 the Company drew
down the final tranches of its unsecured Schuldschein loan
amounting to EUR20.0 million that was agreed in the prior period.
The total Schuldschein loan amounts to EUR50.0 million and has a
blended interest rate of 1.6% with a remaining maturity of 3.2
years and no amortisation.
Shortly after period end the Company repaid its Bayerische
Landesbank facility, which had an outstanding balance of EUR22.8
million at 30 September 2020 and matured on 19 October 2020. During
the term of the loan the net operating income of the assets
increased by 43.1% and the valuation of the financed assets
increased by 73.5% to EUR81.6 million. Discussions with Bayerische
Landesbank to create a new facility against these assets are well
advanced and the Company expects to finalise and draw down before
the financial year end.
As at 30 September 2020 the Company had a net LTV, which
includes unrestricted cash balances of EUR112.4 million, of 31.6%
(31 March 2020: 32.8%) which is well within its stated policy cap
of 40%.The movements in total debt, excluding loan issue costs,
during the period are summarised in the table below:
EUR000
----------------------------------- -------
Total debt as at 31 March 2020 485,755
Drawdown of Schuldschein 20,000
Scheduled amortisation (5,554)
----------------------------------- -------
Total debt as at 30 September 2020 500,201
----------------------------------- -------
Following the final Schuldschein drawdown, the weighted average
interest rate at 30 September 2020 was 1.5% (31 March 2020: 1.5%).
The Group is subject to various hard and soft covenants with which
it complied in the period under review. Interest cover at EBITDA
level amounted to 8.0x while the Company has a total of twelve
assets held on an unencumbered basis with a book value of EUR124.0
million.
Dividend
The Board has declared a dividend for the six months ended 30
September 2020 of 1.82c per share, representing a pay-out ratio of
65% of FFO, and an increase of 2.8% on the 1.77c dividend relating
to the same period last year that was based on 67% of FFO.
The ex-dividend date will be 15 December 2020 for shareholders
on the South African register and 17 December 2020 for shareholders
on the UK register. The record date will be 18 December 2020 for
shareholders on the South African and UK registers and the dividend
will be paid on 21 January 2021 for shareholders on both registers.
A detailed dividend announcement will be made in due course,
including details of a scrip dividend alternative.
Principal risks and uncertainties
The key risks that affect the Group's medium-term performance
and the factors that mitigate these risks have not materially
changed from those set out in the Group's Annual Report and
Accounts 2020. For further information on principal risks and
uncertainties, please see note 2(f) of the Interim Report.
Related parties
There were no new related parties recorded in the period. See
note 25 of the Interim Report for details of existing related
parties and transactions with related parties in the period.
Board
During the period the Company welcomed Caroline Britton and
Kelly Cleveland as independent Non-executive Directors and members
of the Board Committees.
Caroline is a Chartered Accountant and was an audit partner at
Deloitte LLP from April 2000 to May 2018, having qualified with its
predecessor firm, Touche Ross & Co. In addition to providing
audit and advisory services in the financial services sector,
Caroline ran the FTSE 250 Deloitte NextGen CFO programme. Caroline
is a non-executive director of Moneysupermarket.com Group PLC and
Revolut Limited, at both of which she chairs the audit committees.
Caroline is a member of the Nomination, Remuneration and
Sustainability and Ethics Committees and became the Chair of the
Company's Audit Committee on 31 July 2020.
Kelly is a Chartered Accountant, having qualified in New Zealand
in 2001 at PricewaterhouseCoopers, and has worked in real estate in
the UK since 2004. She is currently head of investment at British
Land Co PLC, the FTSE 100 REIT, where she has worked for more than
nine years, including three years in group strategy. Kelly
previously held roles in corporate finance and finance respectively
at the Grosvenor Group and Burberry Group plc. Kelly is a member of
the Audit, Nomination, Remuneration and Sustainability and Ethics
Committees.
Jill May and Justin Atkinson stepped down from the Board at the
close of the Company's Annual General Meeting on 31 July 2020 and
we thank them for their contributions to the Board during their
time with us.
Outlook
The first half of the financial year was focused on ensuring the
health and wellbeing of our employees and tenants whilst
maintaining business continuity and trading performance. Our
results for the six months ending 30 September 2020 demonstrate the
ability of Company to navigate through these uncertain times and in
particular the operational excellence and adaptability of the
Company's operating platform. Underpinning the Company's relative
success during the period is an exceptionally well-diversified
tenant base and wide range of products and spaces that is
continually tailored to meet tenants' changing needs.
Against the background of the second lockdown in Germany in
November 2020 successful trials of a potential vaccine provide hope
that there may be an end in sight to Covid-19 uncertainty and the
related economic difficulties. Germany appears to have been
impacted less than many other countries, in particular compared
with other G7 countries. Furthermore, the breadth and extent of
state support has, thus far, limited the economic impact of
Covid-19 and, as a result, confidence has returned within the
German commercial real estate market. Occupier demand for both
conventional and flexible space has remained strong while investor
appetite for the German light industrial market and the stable
high-yielding income returns it offers has resulted in a return of
transactional activity and downward pressure on yields.
With a strong and well-capitalised balance sheet the Company has
significant acquisition capacity on its own balance sheet or
through the Titanium Venture. Sirius also has the operational and
financial means to continue transforming its assets by investment
in vacant or sub-optimal space, as well as lower quality space
returned through tenant move-outs. As such, the Company is well
positioned for a busy and progressive second half of the financial
year and is trading in line with the Board's expectations.
Andrew Coombs
Chief Executive Officer
Alistair Marks
Chief Financial Officer
20 November 2020
Statement of Directors' responsibilities
Each of the Directors, whose names and functions appear below,
confirm to the best of their knowledge that the unaudited condensed
consolidated interim financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting", as issued by
the IASB, and the interim management report herein includes a fair
review of the information required by the Disclosure Guidance and
Transparency Rules ("DTR"), namely:
-- DTR 4.2.7 (R): an indication of important events that have
occurred during the first six months of the financial year, and
their impact on the condensed set of consolidated interim financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- DTR 4.2.8 (R): any related party transactions that have taken
place in the six month period ended 30 September 2020 that have
materially affected, and any changes in the related party
transactions described in the 2020 Annual Report that could
materially affect, the financial position or performance of Sirius
Real Estate Limited during the period.
The Directors of Sirius Real Estate Limited as at the date of
this announcement are set out below:
-- Danny Kitchen, Chairman*
-- James Peggie, Senior Independent Director*
-- Andrew Coombs, Chief Executive Officer
-- Alistair Marks, Chief Financial Officer
-- Caroline Britton*^
-- Mark Cherry*
-- Kelly Cleveland*^
* Non-executive Directors.
^ Appointed 1 June 2020.
A list of the current Directors is maintained on the Sirius Real
Estate Limited website: www.sirius-real-estate.com.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial information differs from
legislation in other jurisdictions.
By order of the Board
Alistair Marks
Chief Financial Officer
20 November 2020
Independent Review Report to Sirius Real Estate Limited
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2020 which comprises the unaudited
consolidated statement of comprehensive income, the unaudited
consolidated statement of financial position, the unaudited
consolidated statement of changes in equity, the unaudited
consolidated statement of cash flow and the related notes 1 to 27.
We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance
with:
- the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority;
- the South African Institute of Chartered Accountants (SAICA)
Financial Reporting Guides, as issued by the Accounting Practices
Committee;
- the Financial Pronouncements as issued by the Financial
Reporting Standards Council of South Africa .
As disclosed in note 2(d), the annual financial statements are
prepared in accordance with IFRS. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting".
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2020 is not prepared, in all material respects, in
accordance with:
- International Accounting Standard 34, "Interim Financial Reporting";
- the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority;
- the South African Institute of Chartered Accountants (SAICA)
Financial Reporting Guides, as issued by the Accounting Practices
Committee; and
- the Financial Pronouncements as issued by the Financial
Reporting Standards Council of South Africa.
Ernst & Young LLP
London
20 November 2020
Consolidated statement of comprehensive income
for the six months ended 30 September 2020
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
Notes EUR000 EUR000
--------------------------------------------- ----- ------------- -------------
Revenue 4 79,288 72,190
Direct costs 5 (35,377) (32,647)
--------------------------------------------- ----- ------------- -------------
Net operating income 43,911 39,543
Gain on revaluation of investment properties 12 31,909 58,178
(Loss)/gain on disposal of properties (10) 33
Gain on loss of control of subsidiaries - 6,323
Administrative expenses 5 (11,864) (10,024)
Share of profit of associates 15 2,096 343
--------------------------------------------- ----- ------------- -------------
Operating profit 66,042 94,396
--------------------------------------------- ----- ------------- -------------
Finance income 8 1,317 216
Finance expense 8 (5,036) (13,862)
Change in fair value of derivative financial
instruments 8 (132) (1,067)
--------------------------------------------- ----- ------------- -------------
Net finance costs (3,851) (14,713)
--------------------------------------------- ----- ------------- -------------
Profit before tax 62,191 79,683
Taxation 9 (5,593) (9,473)
--------------------------------------------- ----- ------------- -------------
Profit and total comprehensive income
for the period after tax 56,598 70,210
--------------------------------------------- ----- ------------- -------------
Profit and total comprehensive income
attributable to:
Owners of the Company 56,549 70,216
Non-controlling interest 49 (6)
--------------------------------------------- ----- ------------- -------------
Total comprehensive income for the period
after tax 56,598 70,210
--------------------------------------------- ----- ------------- -------------
Earnings per share
Basic earnings per share 10 5.45c 6.86c
Diluted earnings per share 10 5.37c 6.78c
--------------------------------------------- ----- ------------- -------------
All operations of the Group have been classified as
continuing.
Consolidated statement of financial position
as at 30 September 2020
Unaudited Year ended
30 September 31 March
2020 2020
Notes EUR000 EUR000
----------------------------------------------- ----- ------------ ----------
Non-current assets
Investment properties 12 1,243,263 1,193,915
Plant and equipment 2,595 2,374
Intangible assets 13 5,941 5,724
Right of use assets 14 2,180 2,440
Other non-current assets 16 39,014 39,013
Investment in associates 15 14,402 12,306
----------------------------------------------- ----- ------------ ----------
Total non-current assets 1,307,395 1,255,772
----------------------------------------------- ----- ------------ ----------
Current assets
Trade and other receivables 17 17,012 15,048
Derivative financial instruments 46 89
Cash and cash equivalents 18 128,429 121,263
----------------------------------------------- ----- ------------ ----------
Total current assets 145,487 136,400
----------------------------------------------- ----- ------------ ----------
Assets held for sale 12 - 10,100
----------------------------------------------- ----- ------------ ----------
Total assets 1,452,882 1,402,272
----------------------------------------------- ----- ------------ ----------
Current liabilities
Trade and other payables 19 (44,100) (56,780)
Interest-bearing loans and borrowings 20 (31,889) (32,026)
Lease liabilities 14 (5,769) (5,562)
Current tax liabilities (1,470) (779)
Derivative financial instruments (430) (412)
----------------------------------------------- ----- ------------ ----------
Total current liabilities (83,658) (95,559)
----------------------------------------------- ----- ------------ ----------
Non-current liabilities
Interest-bearing loans and borrowings 20 (463,485) (448,202)
Lease liabilities 14 (12,073) (13,588)
Derivative financial instruments (1,026) (956)
Deferred tax liabilities 9 (46,824) (42,151)
----------------------------------------------- ----- ------------ ----------
Total non-current liabilities (523,408) (504,897)
----------------------------------------------- ----- ------------ ----------
Total liabilities (607,066) (600,456)
----------------------------------------------- ----- ------------ ----------
Net assets 845,816 801,816
----------------------------------------------- ----- ------------ ----------
Equity
Issued share capital 22 - -
Other distributable reserve 23 459,004 470,151
Own shares held 22 (2,903) (1,515)
Retained earnings 389,483 332,934
----------------------------------------------- ----- ------------ ----------
Total equity attributable to the owners of the
Company 845,584 801,570
----------------------------------------------- ----- ------------ ----------
Non-controlling interest 232 246
----------------------------------------------- ----- ------------ ----------
Total equity 845,816 801,816
----------------------------------------------- ----- ------------ ----------
The financial statements in this interim report were approved by
the Board of Directors on 20 November 2020 and were signed on its
behalf by:
Danny Kitchen
Chairman
Company number: 46442
Consolidated statement of changes in equity
for the six months ended 30 September 2020
Total
equity
attributable
to the
Issued Other owners Non-
share distributable Own shares Retained of controlling Total
capital reserve held earnings the Company interest equity
Notes EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
----------------------- ----- -------- -------------- ---------- --------- ------------- ------------ --------
As at 31 March 2019 - 491,010 - 234,798 725,808 237 726,045
Share-based payment
transactions 7 - 746 - - 746 - 746
Own shares consolidated - - (1,284) - (1,284) - (1,284)
Own shares allocated - - 175 - 175 - 175
Dividends paid - (11,503) - - (11,503) - (11,503)
Total comprehensive
income for the period - - - 70,216 70,216 (6) 70,210
----------------------- ----- -------- -------------- ---------- --------- ------------- ------------ --------
As at 30 September
2019 (unaudited) - 480,253 (1,109) 305,014 784,158 231 784,389
Share-based payment
transactions - 1,239 - - 1,239 - 1,239
Own shares consolidated - - (406) - (406) - (406)
Own shares allocated - - - - - - -
Dividends paid - (11,341) - - (11,341) - (11,341)
Total comprehensive
income for the period - - - 27,920 27,920 15 27,935
----------------------- ----- -------- -------------- ---------- --------- ------------- ------------ --------
As at 31 March 2020 - 470,151 (1,515) 332,934 801,570 246 801,816
Share-based payment
transactions 7 - 1,448 - - 1,448 - 1,448
Own shares purchased 22 - - (1,613) - (1,613) - (1,613)
Own shares allocated 22 - - 225 - 225 - 225
Dividends paid 24 6,043 (18,638) - - (12,595) (63) (12,658)
Transfer of share
capital 24 (6,043) 6,043 - - - - -
Total comprehensive
income for the period - - - 56,549 56,549 49 56,598
----------------------- ----- -------- -------------- ---------- --------- ------------- ------------ --------
As at 30 September
2020 (unaudited) - 459,004 (2,903) 389,483 845,584 232 845,816
----------------------- ----- -------- -------------- ---------- --------- ------------- ------------ --------
Consolidated statement of cash flow
for the six months ended 30 September 2020
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
Notes EUR000 EUR000
-------------------------------------------------- ----- ------------- -------------
Operating activities
Profit for the year after tax 56,598 70,210
Taxation 9 5,593 9,473
Loss/(gain) on disposal of properties 10 (33)
Gain on loss of control of subsidiaries - (6,323)
Share-based payments 7 1,448 746
Gain on revaluation of investment properties 12 (31,909) (58,178)
Change in fair value of derivative financial
instruments 8 132 1,067
Depreciation of property, plant and equipment 5 317 739*
Amortisation of intangible assets 5 462 -
Depreciation of right of use assets 5 260 2,872
Share of profit of associates 15 (2,096) (343)
Finance income 8 (1,317) (216)
Finance expense 8 5,036 4,755
Exit fees/prepayment of financing penalties 8 - 9,107
-------------------------------------------------- ----- ------------- -------------
Changes in working capital
Increase in trade and other receivables (721) (2,609)
(Decrease)/increase in trade and other payables (1,502) 553
Taxation paid (228) (929)
-------------------------------------------------- ----- ------------- -------------
Cash flows from operating activities 32,083 30,891
-------------------------------------------------- ----- ------------- -------------
Investing activities
Purchase of investment properties - (22,252)
Prepayments relating to new property acquisitions (871) (2,297)
Proceeds from loss on control of subsidiaries
(net of cash disposed) - 10,823
Proceeds from sale of loans to associates - 29,280
Capital expenditure (17,005) (11,870)
Purchase of plant and equipment and intangible
assets (1,211) (1,353)
Interest received 940 32
-------------------------------------------------- ----- ------------- -------------
Cash flows (used in)/from investing activities (18,147) 2,363
-------------------------------------------------- ----- ------------- -------------
Financing activities
Shares purchased (1,613) -
Dividends paid to owners of the Company (12,595) (11,503)
Dividends paid to non-controlling interest (63) -
Proceeds from loans 20,000 35,886
Payment of principal portion of lease liabilities (2,827) (2,762)
Repayment of loans (5,585) (9,708)
Exit fees/prepayment of financing penalties - (525)
Capitalised loan issue cost (133) -
Finance charges paid (3,954) (3,936)**
-------------------------------------------------- ----- ------------- -------------
Cash flows (used in)/from financing activities (6,770) 7,452
-------------------------------------------------- ----- ------------- -------------
Increase in cash and cash equivalents 7,166 40,706
Cash and cash equivalents at the beginning of
the period 121,263 40,282
-------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at the end of the
period 18 128,429 80,988
-------------------------------------------------- ----- ------------- -------------
* Including amortisation of intangible assets of EUR351,000.
** Including capitalised loan issue cost of EUR401,000.
Notes forming part of the financial statements
for the six months ended 30 September 2020
1. General information
Sirius Real Estate Limited (the "Company") is a company
incorporated in Guernsey and resident in the United Kingdom for tax
purposes. Sirius holds a dual primary listing on the Main Market of
the London Stock Exchange ("LSE") (primary listing) and the Main
Board of the Johannesburg Stock Exchange ("JSE").
The consolidated financial information of the Company comprises
that of the Company and its subsidiaries (together referred to as
the "Group") for the six month period to 30 September 2020.
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.
2. Significant accounting policies
(a) Basis of preparation
The unaudited interim condensed set of consolidated financial
statements has been prepared on a historical cost basis, except for
investment properties, investment properties held for sale and
derivative financial instruments, which have been measured at fair
value. The unaudited interim condensed set of consolidated
financial statements is presented in euros and all values are
rounded to the nearest thousand (EUR000), except where otherwise
indicated.
The financial information in these unaudited interim condensed
set of consolidated financial statements does not comprise
statutory accounts. These unaudited interim condensed set of
consolidated financial statements has been reviewed, not audited,
by the Group's auditors, Ernst & Young LLP, which issued an
unmodified review opinion. The financial information presented for
the year ended 31 March 2020 is derived from the statutory accounts
for that year. Statutory accounts for the year ended 31 March 2020
were approved by the Board on 29 May 2020. The report of the
auditors on those accounts was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under Sections 263 (2) or (3) of
the Companies (Guernsey) Law, 2008.
As at 30 September 2020 the Group's consolidated interim
financial statements reflect changes in the application of
accounting policies as described in note 2(b).
(b) Changes in accounting policies
The new standards and interpretations to be applied as at 1
April 2020 do not have an impact on the interim financial
statements of the Group.
(c) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings, which are
widely used alternative metrics to their IFRS equivalents (further
details on EPRA best practice recommendations can be found at
www.epra.com). Note 10 to the interim financial statements includes
a reconciliation of basic and diluted earnings to EPRA
earnings.
EPRA introduced three new features of the net asset valuation
metrics, which replace EPRA NAV for accounting periods commencing
in January 2020: EPRA net reinstatement value, EPRA net tangible
assets and EPRA net disposal value. The Directors have disclosed
the three new EPRA measures in note 11 and disclose EPRA net
tangible assets as the primary EPRA measure. For further
explanation, please see note 11.
The Directors are required, as part of the JSE Listing
Requirements, to disclose headline earnings; accordingly, the
headline earnings calculation is prepared using the Headline
Earnings Circular issued by the South African Institute of
Chartered Accountants, resulting in adjustments for the revaluation
surplus net of tax and gain/loss on sale of properties/investment
in subsidiaries net of related tax. Note 10 to the interim
financial statements includes a reconciliation between IFRS and
headline earnings.
The Directors have chosen to disclose adjusted earnings in order
to provide an alternative indication of the Group's underlying
business performance; accordingly, it excludes the effect of
adjusting items net of related tax. Note 10 to the interim
financial statements includes a reconciliation of adjusting items
included within adjusted earnings, with those adjusting items
stated within administrative expenses in note 5.
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 24 to the interim financial statements. Within adjusted
profit before tax are adjusting items as described above gross of
related tax.
Further details on non-IFRS measures can be found in the
business analysis section of this document.
(d) Statement of compliance
The unaudited condensed interim financial statements have been
prepared in accordance with the Disclosure and Transparency Rules
of the United Kingdom Financial Conduct Authority, the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee, Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, the listing requirements of
JSE, and IAS 34 "Interim Financial Reporting". They do not include
all of the information required for the full annual financial
statements and should be read in conjunction with the consolidated
financial statements of the Group as at and for the year ended 31
March 2020. The unaudited condensed interim financial statements
have been prepared on the basis of the accounting policies set out
in the Group's annual financial statements for the year ended 31
March 2020 except for the changes in accounting policies as shown
in note 2(b). The financial statements for the year ended 31 March
2020 have been prepared in accordance with International Financial
Reporting Standards ("IFRS") issued by the IASB.
(e) Going concern
Given the impact of Covid-19 on the economic conditions in which
the Group is operating, the Directors have placed a particular
focus on the appropriateness of adopting the going concern basis in
preparing the financial statements for the half year ended 30
September 2020. The Group has prepared its going concern assessment
for the twelve-month period to the end of November 2021 (the 'going
concern period'). It is based on the same financial model that
supported the Group's going concern and viability statement
detailed within its Annual Report and Accounts 2020, updated on the
basis of the assumptions set out below. It considers the Group's
Principal Risks and Uncertainties set out in note 2 (f) and is
dependent on a number of factors including financial performance,
continued access to lending facilities (see note 20) and the
ability to continue to operate the Group's secured debt structure
within its financial covenants. The Group's secured debt typically
contains soft covenants that result in operational restrictions and
hard covenants that, if breached, represent default events unless
cured with partial repayments. The cashflow projections also made
assumptions on future trading performance, capital expenditure,
refinancing requirements, and potential valuation movements in
order to estimate the level of headroom on facilities and covenants
for loan to value and interest cover ratios.
In considering going concern, the Directors reviewed detailed
stress tests and sensitivity analysis provided by Management which
modelled the effects of extreme and more realistic scenarios,
taking into account the potential impact of Covid-19 on the Group's
financial position and prospects. The Directors' assessment of
going concern is based on cashflow and covenant projections over
the going concern period.
The limited impact of Covid-19 on the business within the six
month period to 30 September 2020 does not indicate a material
deterioration in the Group's income streams or material falls in
asset values is likely. The Directors however continue to consider
it prudent to test the going concern assessment on what the
Directors consider to be a 'severe but plausible' downside scenario
that results from a major Covid-19 impact. The assumptions included
in the 'severe but plausible' downside scenario relating to the
going concern period included:
-- reduction in occupancy to 75% to March 2021 and further
reduction to 65% occupancy from April 2021;
-- reduction in service charge recovery to 78% to March 2021 and
further reduction to 68% recovery from April 2021;
-- no acquisitions over and above those legally committed to;
-- continuation of forecasted capex investment;
-- cessation of forecasted dividend payments; and
-- repayment and subsequent refinancing of the one and only loan
facility maturing within the going concern period which was re-paid
in October 2020 amounting to EUR22.8 million
In this scenario, the Group's lowest cash position was EUR103.1
million and, as a result, was able to operate within its facilities
and covenants throughout the review period without applying
additional mitigations such as the reduction of capex and continued
to have sufficient cash reserves for the going concern period.
Within the 'severe but plausible' downside scenario the Company is
not dependent on the cessation of dividends or subsequent
refinancing of the loan facility that was re-paid in October 2020.
Future acquisitions over and above those legally committed to are
not included in this scenario and would be funded through a
combination of cash and debt as deemed appropriate.
In addition, the Group assessed its loan covenant position
resulting from a 20% reduction in income and 20% fall in property
valuations. The Group's loan to value covenants are tested based on
the most recent lender commissioned valuations. Based on this
scenario the Group has sufficient cash available to remedy the
resulting covenant breaches.
Based on unrestricted cash at 30 September 2020 amounting to
EUR112.4 million and the results of the 'severe but plausible'
scenario analysed above, the Group considers itself to have
sufficient cash resources to remedy any breaches of its loan
covenants in this 'severe but plausible' downside scenario. In
addition, the Group has available a fully committed but as yet
undrawn capex facility amounting to EUR13.1 million, flexibility in
determining whether to make dividend payments and the possibility
to restrict capital expenditures to that of a non-discretionary
nature in the unlikely event mitigating actions are required. In
addition, following the repayment of one loan facility in October
2020, the group has 15 unencumbered assets with a book value of
EUR195.5 million as of 30 September 2020.
Thus, the Directors have not identified any material
uncertainties which would cast significant doubt on the Group's
ability to continue as a going concern for the going concern period
of twelve month to the end of November 2021. After due
consideration, the Board believes it is appropriate to adopt the
going concern basis in preparing the financial statements.
(f) Principal risks and uncertainties
The key risks that could affect the Group's medium-term
performance and the factors which mitigate these risks have not
materially changed from those set out on pages 38 to 48 of the
Group's Annual Report and Accounts 2020 and have been assessed in
line with the requirements of the 2016 UK Corporate Governance
Code. The risks are reproduced below. The Board is satisfied that
the Company continues to operate within its risk profile for the
remaining six months of the financial year.
Principal risks summary
Risk category Principal risk(s)
------------- ------------------------------------------------
1 Financing -- Availability and pricing of debt
-- Compliance with facility covenants
-- Availability and pricing of equity
capital
-- Increased reputational risk
------------- ------------------------------------------------
2 Valuation -- Property inherently difficult to
value
-- Susceptibility of property market
to change in value
------------- ------------------------------------------------
3 Market -- Reliance on Germany and the German
economy
-- Reliance on specific industries and
SME market
------------- ------------------------------------------------
4 Acquisitive -- Decrease in number of acquisition
growth opportunities coming to market
-- Failure to acquire suitable properties
with desired returns
------------- ------------------------------------------------
5 Organic -- Failure to deliver capex investment
growth programmes
-- Failure to refuel capex investment
programmes
-- Failure to achieve targeted returns
from investments
------------- ------------------------------------------------
6 Customer -- Decline in demand for space
-- Significant tenant move-outs or insolvencies
-- Exposure to tenants' inability to
meet rental and other lease commitments
------------- ------------------------------------------------
7 Regulatory -- Non-compliance with tax or regulatory
and tax obligations
------------- ------------------------------------------------
8 People -- Inability to recruit and retain people
with the appropriate skillset to deliver
the Group strategy
------------- ------------------------------------------------
9 Systems -- System failures and loss of data
and data -- Security breaches
-- Data protection
------------- ------------------------------------------------
10 Covid-19 -- Reduction in occupancy due to insolvencies
-- Delays in cash collection
-- Impact on business continuity and
wellbeing of colleagues
------------- ------------------------------------------------
3. Operating segments
The Directors are of the opinion that the Group is engaged in a
single segment of business, being property investment, and in one
geographical area, Germany. All rental and other income is derived
from operations in Germany. The majority of the Group's investment
properties are multi-tenanted and mixed use and accordingly cannot
be evaluated according to separate segments. There is no one tenant
that represents more than 10% of Group revenues. The chief
operating decision maker is considered to be the Senior Management
Team, which is provided with consolidated IFRS information on a
monthly basis.
4. Revenue
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
--------------------------------------------------- ------------- -------------
Rental and other income from investment properties 46,676 43,877
Service charge income from investment properties 25,932 22,562
Rental and other income from managed properties 4,192 3,429
Service charge income from managed properties 2,488 2,322
--------------------------------------------------- ------------- -------------
Total revenue 79,288 72,190
--------------------------------------------------- ------------- -------------
Other income relates primarily to income associated with
conferencing and catering of EUR972,000 (30 September 2019:
EUR918,000) and fee income from managed properties of EUR1,044,000
(30 September 2019: EUR268,000).
5. Operating profit
The following items have been charged in arriving at operating
profit:
Direct costs
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
------------------------------------- ------------- -------------
Service charge costs 30,335 26,283
Costs relating to managed properties 3,377 5,291
Non-recoverable maintenance 1,665 1,073
------------------------------------- ------------- -------------
Direct costs 35,377 32,647
------------------------------------- ------------- -------------
Administrative expenses
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
-------------------------------------------------- ------------- -------------
Audit and non-audit fees to audit firm 390 185
Legal and professional fees 1,293 1,166
Other administration costs 913 391
LTIP and SIP 1,448 746
Employee costs 5,397 5,372
Director fees and expenses 253 180
Depreciation of plant and equipment 317 351
Amortisation of intangible assets 462 388
Depreciation of right of use assets (see note 14) 260 342
Marketing 966 813
Selling costs relating to assets held for sale - 65
Exceptional items 165 25
-------------------------------------------------- ------------- -------------
Administrative expenses 11,864 10,024
-------------------------------------------------- ------------- -------------
Exceptional items relate to costs directly attributable to
Covid-19 which are mainly costs for signage and hygiene products
(30 September 2019: legal claim accrual adjustment). Employee costs
as stated above relate to costs which are not recovered through
service charge.
6. Employee costs and numbers
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
----------------------- ------------- -------------
Wages and salaries 8,816 7,504
Social security costs 1,358 1,280
Pension 125 103
Other employment costs 26 12
----------------------- ------------- -------------
10,325 8,899
----------------------- ------------- -------------
Included in the costs related to wages and salaries for the
period ended 30 September 2020 are expenses of EUR1,448,000 (30
September 2019: EUR746,000) relating to the granting or award of
shares under LTIPs and SIPs (see note 7). The costs for all periods
include those relating to Executive Directors.
All employees are employed directly by one of the following
Group subsidiary companies: Sirius Facilities GmbH, Sirius
Facilities (UK) Limited, Curris Facilities & Utilities
Management GmbH, SFG NOVA GmbH, Sirius Finance (Guernsey) Limited
and Sirius Corporate Services B.V. The average number of people
employed by the Group during the period was 251 (30 September 2019:
241) expressed in full-time equivalents. In addition, the Board of
Directors consists of five Non-executive Directors (30 September
2019: five) and two Executive Directors (30 September 2019: two) as
at 30 September 2020.
7. Employee schemes
Equity-settled share-based payments
2018 LTIP
The LTIP for the benefit of the Executive Directors and the
Senior Management Team was approved in 2018 with three separate
grant dates. Awards granted under the LTIP are made in the form of
nil-cost options which vest after the three year performance period
with vested awards being subject to a further holding period of two
years. Awards are split between ordinary and outperformance awards.
Ordinary awards carry both adjusted net asset value per share
("TNR") (two-thirds of award) and relative total shareholder return
("TSR") (one-third of award) performance conditions and
outperformance awards carry a sole TNR performance condition.
June 2020 grant
3,600,000 ordinary share awards were granted under the scheme on
15 June 2020 with a total charge for the award of EUR2,265,552.
Charges for the awards are based on fair values calculated at the
grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of
the awards. For the 15 June 2020 LTIP grant an expense of
EUR240,000 is recognised in the half year consolidated statement of
comprehensive income to 30 September 2020.
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 1/3 ordinary
Calculation for award award
Share price at grant date
- EUR 0.84 0.84
Exercise price - EUR nil nil
Expected volatility - % 38.5 38.5
Performance projection period
- years 2.79 2.67
Expected dividend yield -
% 4.28 4.28
Risk-free rate based on European
treasury bonds rate of return (0.677)
- % (0.677) p.a. 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 a share granted under the
ordinary award in the year is EUR0.68.
Assumptions considered in this model include: expected
volatility of the Company's share price, as determined by
calculating the historical volatility of the Company's share price
over the period immediately prior to the date of grant and
commensurate with the expected life of the awards; dividend yield
based on the actual dividend yield as a percentage of the share
price at the date of grant; performance projection period;
risk-free rate; and correlation between comparators.
June 2019 grant
3,760,000 ordinary share awards and 690,000 outperformance share
awards were granted under the scheme on 16 June 2019 with a total
charge for the awards of EUR2,145,511 over three years. 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 EUR383,000
was recognised in the half year consolidated statement of
comprehensive income to 30 September 2020.
The fair value per share for the TNR and TSR elements of the
award was determined using Black-Scholes and Monte-Carlo models
respectively with the following assumptions used in the
calculation:
TNR TSR
--------------------------------- --------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary 1/3 ordinary
award/ award
outperformance
Calculation for 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)
- % (0.695) p.a. 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 a share granted under the
ordinary award in the period 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.
January 2019 grant
In addition, as disclosed in the 2019 Annual Report, 4,000,000
ordinary share awards and 700,000 outperformance share awards were
previously granted under the scheme on 15 January 2019. The portion
of the accounting charge recognised in the consolidated statement
of comprehensive income to 30 September 2020 is based on the
following adjustments to the fair value of the awards linked to the
TNR performance condition:
1) the fair value was discounted at the rate of the dividend
yield over the projection period in order to ensure consistent
treatment for the awards linked to TSR and TNR performance
condition; and
2) the level of expected vesting of the TNR outperformance award
has been adjusted in accordance with the Company's best
estimate.
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/ 1/3 ordinary
outperformance award award
Share price at grant date - EUR 0.66 0.66
Exercise price - EUR nil nil
Expected volatility - % 23.3 23.3
Performance projection period - years 2.21 2.08
Expected dividend yield - % 4.86 4.86
Risk-free rate based on European treasury (0.63) p.a. (0.63) p.a.
bonds rate of return - %
Expected outcome of performance conditions
- % 100/23.9 44.7
Fair value per share - EUR 0.593 0.295
------------------------------------------- --------------------- ------------
The weighted average fair value of a share granted under the
ordinary award in the period is EUR0.49.
As a result, the adjusted total charge for the awards granted on
15 January 2019 is EUR2,111,000. For the half year period ending on
30 September 2020 the proportion of charge recognised in the
statement of comprehensive income for the January 2019 LTIP award
was EUR447,000.
2019 SIP
A share incentive plan ("SIP") for the benefit of senior
employees of the Company was approved in August 2019. The fair
value was based on the Company's estimate of the shares that will
eventually vest. Under the SIP, the awards were granted in the form
of whole shares at no cost to the participants. Shares will vest
after a three year performance period followed by a holding period
of twelve months. The performance conditions used to determine the
vesting of the award were based on the adjusted net asset value
including dividends paid. As a result, under the scheme in August
2019 2,774,750 shares were granted (with an additional 70,000
allocated in the current period), subject to performance criteria,
and an expense including related costs of EUR352,000 was recognised
in the half year consolidated statement of comprehensive income to
30 September 2020.
2020 SIP
During the period another share incentive plan ("SIP") for the
benefit of senior employees of the Company was approved in July
2020. The fair value was based on the Company's estimate of the
shares that will eventually vest. Under the SIP, the awards were
granted in the form of whole shares at no cost to the participants.
Shares will vest at the end of the financial year followed by a
holding period of twelve months. The performance conditions used to
determine the vesting of the award were based on the adjusted net
asset value including dividends paid. As a result, under the scheme
in July 2020 a maximum of 120,000 shares were granted, subject to
performance criteria, and an expense including related costs of
EUR26,000 was recognised in the half year consolidated statement of
comprehensive income to 30 September 2020.
Movements in the number of awards outstanding are as
follows:
Unaudited
six months ended Year ended
30 September 2020 31 March 2020
------------------------ ------------------------
Weighted Weighted
average average
exercise exercise
Number of price Number of price
share awards EUR share awards EUR
----------------------------- ------------- --------- ------------- ---------
Balance outstanding as at
the beginning of the period
(nil exercisable) 11,934,750 - 4,700,000 -
Maximum granted during the
period 3,790,000 - 7,234,750 -
Forfeited during the period (80,000) - - -
Exercised during the period - - - -
----------------------------- ------------- --------- ------------- ---------
Balance outstanding as at
the end of the period (nil
exercisable) 15,644,750 - 11,934,750 -
----------------------------- ------------- --------- ------------- ---------
Employee benefit schemes
A reconciliation of share-based payments and employee benefit
schemes and their impact on the consolidated statement of changes
in equity is as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
----------------------------------------------------- ------------- -------------
Charge relating to 2018 LTIP - January 2019 grant 447 446
Charge relating to 2018 LTIP - June 2019 grant 383 243
Charge relating to 2018 LTIP - June 2020 grant 240 -
Charge relating to 2019 SIP - August 2019 grant 352 57
Charge relating to 2020 SIP - July 2020 grant 26 -
----------------------------------------------------- ------------- -------------
Share-based payment transactions as per consolidated
statement of changes in equity 1,448 746
----------------------------------------------------- ------------- -------------
8. Finance income, finance expense and change in fair value of
derivative financial instruments
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
--------------------------------------------------------- ------------- -------------
Bank interest income 15 32
Finance income from associates 1,302 184
--------------------------------------------------------- ------------- -------------
Finance income 1,317 216
--------------------------------------------------------- ------------- -------------
Bank loan interest expense (3,779) (3,726)
Interest expense related to lease liabilities (see
note 14) (188) (220)
Bank charges and bank interest expense (235) (100)
Amortisation of capitalised finance costs (834) (709)
Refinancing costs, exit fees and early prepayment
penalties - (9,107)
--------------------------------------------------------- ------------- -------------
Finance expense (5,036) (13,862)
--------------------------------------------------------- ------------- -------------
Change in fair value of derivative financial instruments (132) (1,067)
--------------------------------------------------------- ------------- -------------
Net finance expense (3,851) (14,713)
--------------------------------------------------------- ------------- -------------
Included within refinancing costs in the six month period ended
30 September 2019 were exit fees and early prepayment penalties of
EUR9,107,000 that directly related to the repayment of loan
facilities secured by assets included within the Titanium Venture
with AXA Investment Managers - Real Assets that completed on 31
July 2019.
The change in fair value of derivative financial instruments of
EUR132,000 (30 September 2019: EUR1,067,000) reflects the change in
the mark to market valuation of these financial instruments.
9. Taxation
Consolidated statement of comprehensive income
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
------------------------------------------------------------- ------------- -------------
Current income tax
Current income tax charge (636) (479)
Current income tax charge relating to disposals
of investment properties (151) -
Adjustment in respect of prior periods (132) -
------------------------------------------------------------- ------------- -------------
Total current income tax (919) (479)
------------------------------------------------------------- ------------- -------------
Deferred tax
Relating to origination and reversal of temporary
differences (4,674) (8,994)
------------------------------------------------------------- ------------- -------------
Total deferred tax (4,674) (8,994)
------------------------------------------------------------- ------------- -------------
Income tax charge reported in the statement of comprehensive
income (5,593) (9,473)
------------------------------------------------------------- ------------- -------------
Deferred income tax liability
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
-------------------------------------------------- ------------- -----------
Opening balance (42,151) (30,878)
Release due to disposals 483 414
Taxes on the revaluation of investment properties (5,156) (11,687)
-------------------------------------------------- ------------- -----------
Balance as at period end (46,824) (42,151)
-------------------------------------------------- ------------- -----------
The Group is mainly subject to taxation in Germany with the
income from the Germany-located rental business with a tax rate of
15.825%. It has tax losses of EUR337,177,000 (31 March 2020:
EUR351,265,000) that are available for offset against future
profits of its subsidiaries in which the losses arose under the
restrictions of the minimum taxation rule. Deferred tax assets have
not been recognised in respect of the revaluation losses on
investment properties, the valuation of the Company LTIP and
interest rate swaps as they may not be used to offset taxable
profits elsewhere in the Group as realisation is not assured.
10. Earnings per share
The calculation of the basic, diluted, EPRA, headline and
adjusted earnings per share is based on the following data:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
--------------------------------------------------------- ------------- -------------
Earnings attributable to the owners of the Company
Basic earnings 56,549 70,216
Diluted earnings 56,549 70,216
EPRA earnings 28,326 24,921
Diluted EPRA earnings 28,326 24,921
Headline earnings 28,246 14,817
Diluted headline earnings 28,246 14,817
--------------------------------------------------------- ------------- -------------
Adjusted
Basic earnings 56,549 70,216
Deduct revaluation gain (31,909) (58,178)
Add loss/deduct gain on sale of properties 10 (33)
Deduct gain on loss of control of subsidiaries - (6,323)
Tax in relation to the revaluation surplus and loss
on sale of properties above 4,877 9,064
NCI relating to revaluation, net of related tax 46 29
Deduct revaluation gain on investment property relating
to associates (1,673) (22)
Tax in relation to the revaluation gain on investment
property relating to associates above 346 64
--------------------------------------------------------- ------------- -------------
Headline earnings after tax 28,246 14,817
Add change in fair value of derivative financial
instrument, net of related tax and NCI 80 997
Deduct revaluation expense relating to leased investment
properties (1,617) -
Add adjusting items, net of related tax and NCI* 1,613 9,943
--------------------------------------------------------- ------------- -------------
Adjusted earnings after tax 28,322 25,757
--------------------------------------------------------- ------------- -------------
Number of shares
Weighted average number of ordinary shares for the
purpose of basic, headline, adjusted and basic EPRA
earnings per share 1,037,394,967 1,023,014,308
--------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of diluted earnings, diluted headline earnings,
diluted adjusted earnings and diluted EPRA earnings
per share 1,053,039,717 1,034,854,308
--------------------------------------------------------- ------------- -------------
Basic earnings per share 5.45c 6.86c
--------------------------------------------------------- ------------- -------------
Diluted earnings per share 5.37c 6.78c
--------------------------------------------------------- ------------- -------------
Basic EPRA earnings per share 2.73c 2.44c
--------------------------------------------------------- ------------- -------------
Diluted EPRA earnings per share 2.69c 2.41c
--------------------------------------------------------- ------------- -------------
Headline earnings per share 2.72c 1.45c
--------------------------------------------------------- ------------- -------------
Diluted headline earnings per share 2.68c 1.43c
--------------------------------------------------------- ------------- -------------
Adjusted earnings per share 2.73c 2.51c
--------------------------------------------------------- ------------- -------------
Adjusted diluted earnings per share 2.69c 2.48c
--------------------------------------------------------- ------------- -------------
* See reconciliation between adjusting items as stated within
earnings per share and those stated within notes 5 and 8.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
Notes EUR000 EUR000
----------------------------------------------- ----- ------------- -------------
Exceptional items 5 165 25
Finance restructuring costs 8 - 9,107
Selling costs relating to assets held for sale - 65
LTIP and SIP 5 1,448 746
----------------------------------------------- ----- ------------- -------------
Adjusting items as per note 10 1,613 9,943
----------------------------------------------- ----- ------------- -------------
EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
--------------------------------------------------------- ------------- -------------
Basic and diluted earnings attributable to owners
of the Company 56,549 70,216
Gain on revaluation of investment properties (31,909) (58,178)
Gain on disposal of properties (including tax) 161 (33)
Deduct gain on loss of control of subsidiaries - (6,323)
Refinancing costs, exit fees and early prepayment
penalties - 9,107
Change in fair value of derivative financial instruments 132 1,067
Deferred tax in respect of EPRA adjustments 4,674 8,994
NCI in respect of the above 46 29
Deduct revaluation gain on investment property relating
to associates (1,673) (22)
Tax in relation to the revaluation gain on investment
property relating to associates 346 64
--------------------------------------------------------- ------------- -------------
EPRA earnings 28,326 24,921
--------------------------------------------------------- ------------- -------------
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
3,684,608 own shares held (30 September 2019: 1,500,000), which are
held by an Employee Benefit Trust on behalf of the Group.
The weighted average number of shares for the purpose of
diluted, diluted EPRA, diluted headline and adjusted diluted
earnings per share is calculated as follows:
Unaudited Unaudited
six month six month
ended ended
30 September 30 September
2020 2019
-------------------------------------------------------------------- -------------
Weighted average number of ordinary shares for the
purpose of basic, basic EPRA, headline and adjusted
earnings per share 1,037,394,967 1,023,014,308
Effect of grant of SIP shares 2,894,750 2,690,000
Effect of grant of LTIP shares 12,750,000 9,150,000
------------------------------------------------------ ------------- -------------
Weighted average number of ordinary shares for the
purpose of diluted, diluted EPRA, diluted headline
and adjusted diluted earnings per share 1,053,039,717 1,034,854,308
------------------------------------------------------ ------------- -------------
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 property revaluation, changes in fair
value of derivative financial instruments, profits and losses on
disposals and deferred tax in respect of EPRA adjustments.
11. Net asset value per share
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
-------------------------------------------------------- ------------- -------------
Net asset value
Net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) 845,584 801,570
Deferred tax arising on revaluation gain, derivative
financial instruments and LTIP valuation 46,824 42,151
Derivative financial instruments 1,410 1,279
-------------------------------------------------------- ------------- -------------
Adjusted net asset value attributable to the owners
of the Company 893,818 845,000
-------------------------------------------------------- ------------- -------------
Number of shares
Number of ordinary shares for the purpose of net
asset value per share 1,041,666,664 1,036,257,101
Number of ordinary shares for the purpose of EPRA
NTA per share 1,057,311,414 1,048,191,851
Net assets per share 81.18c 77.35c
Adjusted net asset value per share 85.81c 81.54c
EPRA NTA per share 84.42c 80.44c
-------------------------------------------------------- ------------- -------------
Net asset value at the end of the period (basic) 845,584 801,570
Derivative financial instruments at fair value 1,410 1,279
Deferred tax in respect of EPRA adjustments 46,824 42,151
Goodwill as per the statement of financial position (3,738) (3,738)
Intangibles as per the IFRS financial position (2,203) (1,986)
Deferred tax in respect of EPRA adjustments in relation
to investment in associates 4,686 4,337
-------------------------------------------------------- ------------- -------------
EPRA NTA 892,563 843,130
-------------------------------------------------------- ------------- -------------
EPRA introduced three new features of the net asset valuation
metrics, which replaced EPRA NAV for accounting periods commencing
in January 2020. Companies are expected to provide a bridge between
the previous EPRA NAV metrics and the new ones for both the current
and comparative accounting period in order to assist the users of
their financial statements.
EPRA NRV EPRA NTA EPRA NDV EPRA NAV
---------------------------------------------- ------------- ------------- -----------------
New measures Previous measure
---------------------------------------------------------------------------- -----------------
30 September 30 September 30 September
2020 2020 2020 30 September
EUR 000 EUR 000 EUR 000 2020
EUR 000
---------------------------------------------- ------------- ------------- -----------------
Net asset value at the end of
period (basic) 845,584 845,584 845,584 845,584
----------------------------------- ---------- ------------- ------------- -----------------
Diluted EPRA net asset value
at fair value 845,584 845,584 845,584 845,584
----------------------------------- ---------- ------------- ------------- -----------------
Group
Derivative financial instruments
at fair value 1,410 1,410 n/a 1,410
Deferred tax in respect of EPRA
adjustments 46,824 46,824(*) n/a 46,824
Goodwill as per the statement
of financial position n/a (3,738) (3,738) n/a
Intangibles as per the statement
of financial position n/a (2,203) n/a n/a
Fair value of fixed interest
rate debt n/a n/a (3,912) n/a
Real estate transfer tax 96,966 n/a n/a n/a
Investment in associate
Deferred tax in respect of EPRA
adjustments 4,686 4,686* n/a n/a**
Real estate transfer tax 6,511 n/a n/a n/a
----------------------------------- ---------- ------------- ------------- -----------------
Total EPRA NRV, NTA, NDV and
NAV 1,001,981 892,563 837,934 893,818
----------------------------------- ---------- ------------- ------------- -----------------
EPRA NRV, NTA, NDV and NAV per
share 94.77c 84.42c 79.25c 84.54c
----------------------------------- ---------- ------------- ------------- -----------------
*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 30 September 2020.
** While the previous definition of EPRA NAV included this
adjustment, in prior periods it has not been considered
sufficiently material to adjust. As the value of this difference is
expected to become more material in future periods, the adjustment
will now be included in the calculation of the EPRA measures where
appropriate.
EPRA NRV EPRA NTA EPRA NDV EPRA NAV
---------------------------------- ------------------- --------- -----------------
New measures Previous measure
------------------------------------------------------------------ -----------------
31 March 31 March 31 March 31 March 2020
2020 2020 2020 EUR 000
EUR 000 EUR 000 EUR 000
-------------------------------------------- --------- --------- -----------------
Net asset value at the end of
period (basic) 801,570 801,570 801,570 801,570
----------------------------------- -------- --------- --------- -----------------
Diluted EPRA net asset value
at fair value 801,570 801,570 801,570 801,570
----------------------------------- -------- --------- --------- -----------------
Group
Derivative financial instruments
at fair value 1,279 1,279 n/a 1,279
Deferred tax in respect of EPRA
adjustments 42,151 41,668 n/a 42,151
Goodwill as per the statement
of financial position n/a (3,738) (3,738) n/a
Intangibles as per the statement
of financial position n/a (1,986) n/a n/a
Fair value of fixed interest
rate debt n/a n/a (3,688) n/a
Real estate transfer tax 93,810 n/a n/a n/a
Investment in associate
Deferred tax in respect of EPRA
adjustments 4,337 4,337* n/a n/a**
Real estate transfer tax 6,322 n/a n/a n/a
----------------------------------- -------- --------- --------- -----------------
Total EPRA NRV, NTA, NDV and
NAV 949,469 843,130 794,144 845,000
----------------------------------- -------- --------- --------- -----------------
EPRA NRV, NTA, NDV and NAV per
share 90.58c 80.44c 75.76c 80.62c
----------------------------------- -------- --------- --------- -----------------
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,
NDV and NAV per share is calculated as follows:
Unaudited Year ended
30 September 31 March
2020 2020
--------------------------------------------------------- -------------
Number of ordinary shares for the purpose
of net asset value per share 1,041,666,664 1,036,257,101
Effect of grant of SIP shares 2,894,750 2,784,750
Effect of grant of LTIP shares 12,750,000 9,150,000
------------------------------------------- ------------- -------------
Number of ordinary shares for the purpose
of
EPRA NRV, NTA, NDV and NAV per share 1,057,311,414 1,048,191,851
------------------------------------------- ------------- -------------
The number of shares has been reduced by 3,684,608 own shares
held (31 March 2020: 2,120,720 shares), which are held by an
Employee Benefit Trust on behalf of the Group.
12. Investment properties
The movement in the book value of investment properties is as
follows:
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
----------------------------------------------------- ------------- ----------
Total investment properties at book value as at
the beginning
of the period* 1,193,915 993,916
Additions - owned investment properties - 120,434
Additions - leased investment properties 1,519 699
Capital expenditure and broker fees 15,920 33,177
Reclassified as investment properties held for sale - (10,100)
Gain on revaluation above capex and broker fees 34,379 59,939
Adjustment in respect of lease incentives (853) (235)
Deficit on revaluation relating to leased investment
properties (1,617) (3,915)
----------------------------------------------------- ------------- ----------
Total investment properties at book value as at
the end
of the period* 1,243,263 1,193,915
----------------------------------------------------- ------------- ----------
The reconciliation of the valuation carried out by the external
valuer to the carrying values shown in the statement of financial
position is as follows:
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
------------------------------------------------ ------------- ----------
Owned investment properties at market value per
valuer's report* 1,229,740 1,179,440
Adjustment in respect of lease incentives (4,210) (3,357)
Leased investment property market value 17,733 17,832
------------------------------------------------ ------------- ----------
Total investment properties at book value as at
period end* 1,243,263 1,193,915
------------------------------------------------ ------------- ----------
* Excluding assets held for sale.
The fair value (market value) of the Group's owned investment
properties at 30 September 2020 has been arrived at on the basis of
a valuation carried out at that date by Cushman & Wakefield LLP
(31 March 2020: Cushman & Wakefield LLP), an independent valuer
accredited in terms of the 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 weighted average lease expiry remaining across the whole
portfolio at 30 September 2020 was 3.0 years (31 March 2020: 2.9
years).
As a result of the level of judgement and estimations used in
arriving at the market valuations, the amounts that may ultimately
be realised in respect of any given property may differ from the
valuations shown in the statement of financial position.
The fair value (market value) of the Group's leased investment
properties at 30 September 2020 has been arrived at on the basis of
a valuation carried out by the Group.
The reconciliation of surplus on revaluation above capex as per
the statement of comprehensive income is as follows:
Unaudited
Six month
ended Year ended
30 September 31 March
2020 2020
EUR000 EUR000
------------------------------------------------------ ------------- ----------
Gain on revaluation above capex and broker fees 34,379 59,939
Adjustment in respect of lease incentives (853) (235)
Deficit on revaluation relating to leased investment
properties (1,617) (3,915)
------------------------------------------------------ ------------- ----------
Gain on revaluation of investment properties reported
in the statement of comprehensive income 31,909 55,789
------------------------------------------------------ ------------- ----------
Included in the gain on revaluation of investment properties
reported in the statement of comprehensive income (excluding the
revaluation effects in respect of leased investment properties) are
gross gains of EUR42.2 million and gross losses of EUR10.3 million
(31 March 2020: gross gains of EUR78.2 million and gross losses of
EUR22.4 million). Included in the statement of comprehensive income
for the six month period ended 30 September 2019 were gross gains
of EUR62.0 million and gross losses of EUR3.8 million.
Other than the capital commitments disclosed in note 26 the
Group is under no contractual obligation to purchase, construct or
develop any investment property. The Group is responsible for
routine maintenance to the investment properties.
All investment properties are categorised as Level 3 fair values
as they use significant unobservable inputs. There have not been
any transfers between levels during the 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):
As at 30 September 2020
Market Technique Significant
value assumption
Sector (EUR) Range
---------------- ----------- ---------- ----------------- -----------------
Traditional Discounted Current rental
business park 694,940,000 cash flow income EUR428k-EUR6,734k
Market rental
income EUR424k-EUR7,187k
Gross initial
yield 4.0%-10.5%
Discount factor 3.9%-7.5%
Void period
(months) 12-24
Estimated capital
value per sqm EUR300-EUR1,313
---------------- ----------- ---------- ----------------- -----------------
Modern business Discounted Current rental
park 329,740,000 cash flow income EUR492k-EUR4,314k
Market rental
income EUR485k-EUR4,319k
Gross initial
yield 5.1%-10.7%
Discount factor 3.9%-6.3%
Void period
(months) 12-24
Estimated capital
value per sqm EUR559-EUR1,700
---------------- ----------- ---------- ----------------- -----------------
Discounted Current rental
Office 205,060,000 cash flow income EUR402k-EUR3,318k
Market rental
income EUR445k-EUR3,566k
Gross initial
yield 3.7%-10.5%
Discount factor 4.8%-7.5%
Void period
(months) 12-24
Estimated capital
value per sqm EUR630-EUR1,691
---------------- ----------- ---------- ----------------- -----------------
As at 31 March 2020
Market Technique Significant
value assumption
Sector (EUR) Range
---------------- ----------- ---------- ----------------- -----------------
Traditional Discounted Current rental
business park 668,940,000 cash flow income EUR260k-EUR6,573k
Market rental
income EUR424k-EUR7,186k
Gross initial
yield 2.6%-11.1%
Discount factor 5.3%-8.1%
Void period
(months) 12-24
Estimated capital
value per sqm EUR299-EUR1,257
---------------- ----------- ---------- ----------------- -----------------
Modern business Discounted Current rental
park 313,830,000 cash flow income EUR478k-EUR4,009k
Market rental
income EUR482k-EUR4,354k
Gross initial
yield 5.2%-10.8%
Discount factor 5.3%-7.4%
Void period
(months) 12-24
Estimated capital
value per sqm EUR548-EUR1,649
---------------- ----------- ---------- ----------------- -----------------
Discounted Current rental
Office 206,770,000 cash flow income EUR358k-EUR3,201k
Market rental
income EUR445k-EUR3,507k
Gross initial
yield 4.0%-10.4%
Discount factor 5.9%-7.9%
Void period
(months) 12-24
Estimated capital
value per sqm EUR610-EUR1,509
---------------- ----------- ---------- ----------------- -----------------
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. This gives rise to
large ranges in the inputs.
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 the
valuations shown in the statement of financial position. For
example, an increase in market rental values of 5% would lead to an
increase in the fair value of the investment properties of
EUR60,590,000 and a decrease in market rental values of 5% would
lead to a decrease in the fair value of the investment properties
of EUR61,810,000. Similarly, an increase in the discount rates of
0.25% would lead to a decrease in the fair value of the investment
properties of EUR25,130,000 and a decrease in the discount rates of
0.25% would lead to an increase in the fair value of the investment
properties of EUR25,000,000.
Investment properties held for sale
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
------------------------- ------------- ----------
Weilimdorf* - 10,100
------------------------- ------------- ----------
Balance as at period end - 10,100
------------------------- ------------- ----------
* The sale on the asset held for sale completed on 1 April
2020.
13. Intangible assets
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
---------------------- ------------- ----------
Goodwill 3,738 3,738
Software and licences 2,203 1,986
------------------------ ------------- ----------
As at period end 5,941 5,724
------------------------ ------------- ----------
14. Right of use assets and lease liabilities
Set out below are the carrying amounts of right of use assets
recognised and the movements during the period:
Office Total
EUR000 EUR000
--------------------- ------- -------
As at 1 April 2020 2,440 2,440
Depreciation expense (260) (260)
----------------------- ------- -------
As at period end 2,180 2,180
----------------------- ------- -------
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 EUR17,733,000
are classified as investment properties, of which EUR11,997,000
relate to commercial property.
Set out below are the carrying amounts of lease liabilities and
the movements during the period:
Total
EUR000
----------------------------------------------- --------
As at 1 April 2020 (19,150)
Accretion of interest (188)
Additions (1,519)
Payments 3,015
----------------------------------------------- --------
Balance as at period end (17,842)
----------------------------------------------- --------
Current lease liabilities as at period end (5,769)
-----------------------------------------------
Non-current lease liabilities as at period end (12,073)
----------------------------------------------- --------
The overall weighted average discount rate used for the period
is 1.9% (31 March 2020: 1.9%).
15. Investment in associates
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:
Unaudited
30 September Year ended
2020 31 March 2020
EUR000 EUR000
-------------------------------- ------------- --------------
Current assets 11,154 9,177
Non-current assets 235,414 228,687
Current liabilities (7,844) (5,180)
Non-current liabilities (203,175) (202,072)
-------------------------------- ------------- --------------
Equity 35,549 30,612
Unrecognised accumulated losses 5,599 4,548
-------------------------------- ------------- --------------
Subtotal 41,148 35,160
-------------------------------- ------------- --------------
Group's share in equity - 35% 14,402 12,306
-------------------------------- ------------- --------------
Unaudited
30 September
2020 31 March 2020
EUR000 EUR000
------------------------------------------------ ------------- -------------
Net operating income 6,881 6,797
Gain on revaluation of investment properties 4,603 682
Administrative expense (1,057) (1,158)
------------------------------------------------ ------------- -------------
Operating profit 10,427 6,321
Net finance costs (4,429) (3,556)
------------------------------------------------ ------------- -------------
Profit before tax 5,998 2,765
Taxation (1,061) (1,232)
Unrecognised losses 1,051 4,548
------------------------------------------------ ------------- -------------
Total comprehensive income for the period after
tax 5,988 6,082
------------------------------------------------ ------------- -------------
Group's share of profit for the period - 35% 2,096 2,129
------------------------------------------------ ------------- -------------
Included within the non-current liabilities are shareholder
loans amounting to EUR106,296,000 (31 March 2020: EUR106,296,000).
As at 30 September 2020 no contingent liabilities existed (31 March
2020: EURnil). The associates had contracted capital expenditure
for development and enhancements of EUR1,115,000 as at 30 September
2020 (31 March 2020: EUR1,306,000).
16. Other non-current assets
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
------------------------- ------------- ----------
Guarantees and deposits 1,810 1,809
Loans to associates 37,204 37,204
------------------------- ------------- ----------
Balance as at period end 39,014 39,013
------------------------- ------------- ----------
Loans to associates relate to shareholder loans granted to
associates by the Group. The loans terminate on 31 December 2024,
are fully subordinated and are charged at a fixed interest
rate.
17. Trade and other receivables
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
------------------------- ------------- ----------
Trade receivables 5,147 7,961
Other receivables 8,878 5,942
Prepayments 2,987 1,145
------------------------- ------------- ----------
Balance as at period end 17,012 15,048
------------------------- ------------- ----------
Trade receivables include service charge related receivables
amounting to EUR520,000 (31 March 2020: EUR796,000) that are
recognised in accordance with IFRS 15.
Other receivables include lease incentives of EUR4,210,000 (31
March 2020: EUR3,357,000).
Prepayments include costs totalling EUR871,000 (31 March 2020:
EURnil) relating to the acquisition of a new site in Norderstedt
that was notarised in September 2020 and is expected to complete in
the second half of the financial year.
18. Cash and cash equivalents
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
------------------------- ------------- ----------
Cash at bank 112,399 96,577
Restricted cash 16,030 24,686
------------------------- ------------- ----------
Balance as at period end 128,429 121,263
------------------------- ------------- ----------
Cash at bank earns interest at floating rates based on daily
bank deposit rates. The fair value of cash as at 30 September 2020
is EUR128,429,000 (31 March 2020: EUR121,263,000).
As at 30 September 2020, EUR16,030,000 (31 March 2020:
EUR24,686,000) of cash is held in restricted accounts.
EUR11,264,000 (31 March 2020: EUR10,927,000) relates to deposits
received from tenants. An amount of EURnil (31 March 2020:
EUR3,500,000) is cash held in escrow in accordance with one of the
Group's loan agreements and an amount of EUR131,000 (31 March 2020:
EUR131,000) is held in restricted accounts for office rent
deposits. An amount of EUR3,199,000 (31 March 2020: EUR4,294,000)
relates to amounts reserved for future bank loan interest and
amortisation payments of the Group's banking facilities. An amount
of EUR126,000 (31 March 2020: EUR784,000) relates to amounts
reserved for future capital expenditure. An amount of EURnil (31
March 2020: EUR5,050,000) relates to disposal proceeds retained as
security and an amount of EUR1,310,000 (31 March 2020: EURnil)
relates to a cash deposit for an issued bank guarantee to a
vendor.
19. Trade and other payables
Unaudited Year ended
30 September 31 March
2020 2020
EUR000 EUR000
---------------------------------- ------------- ----------
Trade payables 5,744 9,578
Accrued expenses 18,776 18,056
Interest and amortisation payable 481 333
Tenant deposits 11,264 10,927
Unearned revenue 4,096 4,001
Other payables 3,739 13,885
---------------------------------- ------------- ----------
Balance as at period end 44,100 56,780
---------------------------------- ------------- ----------
Accrued expenses include costs totalling EUR11,865,000 (31 March
2020: EUR10,280,000) relating to service charge costs that have not
been invoiced to the Group.
Included within other payables are mainly credit balances due to
tenants in relation to over collections of service charge in amount
of EUR2,145,000. As at 31 March 2020, other payables included
EUR9,090,000 of proceeds relating to the sale of the Weilimdorf
asset that was categorised as an asset held for sale at 31 March
2020 in advance of the completion date of 1 April 2020.
Unearned revenue includes service charge amounts of EUR659,000
(31 March 2020: EUR459,000). Service charge income is only
recognised as income when the performance obligations are met. All
unearned revenue of the prior period was recognised as revenue in
the current period.
20. Interest-bearing loans and borrowings
Unaudited
30 September 31 March
Interest rate Loan maturity 2020 2020
% date EUR000 EUR000
-------------------------------------- ------------- ------------- ------------- --------
Current
Bayerische Landesbank
19 October
- hedged floating rate facility Hedged(1) 2020 22,844 23,098
SEB AG
1 September
- fixed rate facility 1.84 2022 1,180 1,180
30 October
- hedged floating rate facility Hedged(2) 2024 459 458
- capped floating rate facility Capped(3) 25 March 2025 760 760
Berlin Hyp AG/Deutsche Pfandbriefbank
AG
- fixed rate facility 1.66 27 April 2023 2,944 2,920
Berlin Hyp AG
31 October
- fixed rate facility 1.48 2023 1,867 1,853
31 October
- fixed rate facility 0.90 2023 1,460 1,454
Saarbrücken Sparkasse
28 February
- fixed rate facility 1.53 2025 754 748
Deutsche Pfandbriefbank AG
31 December
- hedged floating rate facility Hedged(4) 2023 1,110 1,110
31 December
- floating rate facility Floating(5) 2023 140 140
Capitalised finance charges
on all loans (1,629) (1,695)
-------------------------------------- ------------- ------------- ------------- --------
31,889 32,026
-------------------------------------- ------------- ------------- ------------- --------
Non-current
SEB AG
1 September
- fixed rate facility 1.84 2022 51,920 52,510
30 October
- hedged floating rate facility Hedged(2) 2024 21,554 21,784
30 October
- floating rate facility Floating 2024 2,000 2,000
- capped floating rate facility Capped(3) 25 March 2025 35,340 35,720
Berlin Hyp AG/Deutsche Pfandbriefbank
AG
- fixed rate facility 1.66 27 April 2023 57,627 59,105
Berlin Hyp AG
31 October
- fixed rate facility 1.48 2023 61,081 62,018
31 October
- fixed rate facility 0.90 2023 112,578 113,310
Saarbrücken Sparkasse
28 February
- fixed rate facility 1.53 2025 15,411 15,789
Deutsche Pfandbriefbank AG
31 December
- hedged floating rate facility Hedged(4) 2023 52,721 53,276
31 December
- floating rate facility Floating(4) 2023 6,451 6,521
Schuldschein
5 December
- floating rate facility Floating(5) 2022 5,000 5,000
6 January
- floating rate facility Floating(5) 2023 10,000 10,000
6 January
- floating rate facility Floating(5) 2025 5,000 5,000
- fixed rate facility 1.70 3 March 2025 10,000 10,000
- fixed rate facility 1.60 3 July 2023 20,000 -
Capitalised finance charges
on all loans (3,198) (3,831)
-------------------------------------- ------------- ------------- ------------- --------
463,485 448,202
-------------------------------------- ------------- ------------- ------------- --------
Total 495,374 480,228
-------------------------------------- ------------- ------------- ------------- --------
(1) This facility is hedged with a swap charged at a rate of 1.66%.
(2) Tranche 1 of this facility is fully hedged with a swap
charged at a rate of 2.58%; tranche 2 of this facility is fully
hedged with a swap charged at a rate of 2.56%.
(3) This facility is hedged with a cap rate at 0.75% and charged
with a floating rate of 1.58% over six month EURIBOR (not less than
0%) for the full term of the loan.
(4) Tranche 1 of this facility is fully hedged with a swap
charged at a rate of 1.89%; tranche 2 of this facility is fully
hedged with a swap charged at a rate of 1.74%; and EUR19.1 million
of tranche 3 of this facility is fully hedged with a swap charged
at a rate of 1.40%. The last extension from 30 March 2020 of this
facility of EUR6.5 million and the arrangement fee of EUR0.5
million are charged with a floating rate of 1.20% over three month
EURIBOR (not less than 0%).
(5) This unsecured facility has a floating rate of 1.50% over
six month EURIBOR (not less than 0%) for the first two tranches and
a floating rate of 1.70% over six month EURIBOR (not less than 0%)
for the third tranche.
The Group has pledged 45 (31 March 2020: 45) investment
properties to secure several separate interest-bearing debt
facilities granted to the Group. The 45 (31 March 2020: 45)
properties had a combined valuation of EUR1,101,492,000 as at 30
September 2020 (31 March 2020: EUR1,067,650,000).
Bayerische Landesbank
On 20 October 2015, the Group agreed to a facility agreement
with Bayerische Landesbank for EUR25.4 million. The loan terminates
on 19 October 2020. Amortisation is 2% per annum with the remainder
due in the fourth year. The full facility has been hedged at a rate
of 1.66% until 19 October 2020 by way of an interest rate swap. The
facility is secured over four (later three) property assets and is
subject to various covenants with which the Group has complied. On
1 April 2020 the Company completed the sale of Weilimdorf asset
that acted as security within this facility. As a result, EUR5
million was held in an escrow account in the period. The facility
was repaid in full upon maturity on 19 October 2020; see note 27 -
Post balance sheet events.
SEB AG
On 2 September 2015, the Group agreed to a facility agreement
with SEB AG for EUR59.0 million to refinance the two existing
Macquarie loan facilities. The loan terminates on 1 September 2022.
Amortisation is 2% per annum with the remainder due in the seventh
year. The loan facility is charged at a fixed interest rate of
1.84%. This facility is secured over eleven property assets that
were previously financed through the Macquarie loan facilities. The
facility is subject to various covenants with which the Group has
complied. No changes to the terms of the facility have occurred
during the six month period ended 30 September 2020.
On 30 October 2017, the Group agreed to a second facility
agreement with SEB AG for EUR22.9 million. Tranche 1, totalling
EUR20.0 million, has been hedged at a rate of 2.58% until 30
October 2024 by way of an interest rate swap. Tranche 2, totalling
EUR2.9 million, has been hedged at a rate of 2.56% until 30 October
2024 by way of an interest rate swap. The loan terminates on 30
October 2024. Amortisation is 2.0% per annum across the full
facility with the remainder due in one instalment on the final
maturity date. The facility is secured over three property assets
and is subject to various covenants with which the Group has
complied. No changes to the terms of the facility have occurred
during the six month period ended 30 September 2020. In addition,
the Group agreed a capex facility for EUR7.1 million until 30
October 2024. The capex facility is not subject to amortisation and
is charged with a floating interest rate of 1.88% over six month
EURIBOR (not less than 0%) for the full term of the loan. As at 30
September 2020 a total of EUR2.0 million had been drawn down.
On 26 March 2018, the Group agreed to a third facility agreement
with SEB AG for EUR38.0 million. The loan terminates on 25 March
2025. Amortisation is 2% per annum with the remainder due in one
instalment on the final maturity date. The loan facility is charged
with a floating rate of 1.58% over six month EURIBOR (not less than
0%) for the full term of the loan. In accordance with the
requirements of the loan facility the Group hedged its exposure to
floating interest rates by purchasing a cap in June 2018 which
limits the Group's interest rate exposure on the facility to 2.33%.
The facility is secured over six property assets and is subject to
various covenants with which the Group has complied. No changes to
the terms of the facility have occurred during the six month period
ended 30 September 2020. In addition, the Group agreed a capex
facility for EUR8.0 million until 25 March 2025. The capex facility
is not subject to amortisation and is charged at an interest rate
of 1.58%. As at 30 September 2020 the capex facility remained
undrawn.
Berlin Hyp AG/Deutsche Pfandbriefbank AG
On 31 March 2014, the Group agreed to a facility agreement with
Berlin Hyp AG and Deutsche Pfandbriefbank AG for EUR115.0 million.
The original loan was due to terminate on 31 March 2019.
Amortisation is 2% p.a. for the first two years, 2.5% for the third
year and 3.0% thereafter, with the remainder due in the fifth year.
Half of the facility (EUR55.2 million) is charged interest at 3%
plus three months' EURIBOR and is capped at 4.5%, and the other
half (EUR55.2 million) has been hedged at a rate of 4.265% until 31
March 2019. This facility is secured over nine property assets and
is subject to various covenants with which the Group has complied.
On 28 April 2016, the Group agreed to refinance this facility which
had an outstanding balance of EUR110.4 million at 31 March 2016.
The new facility is split in two tranches totalling EUR137.0
million and terminates on 27 April 2023. Tranche 1, totalling
EUR94.5 million, is charged at a fixed interest rate of 1.66% for
the full term of the loan. Tranche 2, totalling EUR42.5 million, is
charged with a floating rate of 1.57% over three month EURIBOR (not
less than 0%) for the full term of the loan. Amortisation is set at
2.5% across the full facility with the remainder due in one
instalment on the final maturity date. The facility is secured over
eleven property assets and is subject to various covenants with
which the Group has complied.
On 30 June 2017, the Group repaid a total of EUR5.8 million
following the disposal of the Düsseldorf asset. On 30 September
2017, the Group repaid tranche 2 of the loan in full amounting to
EUR40.9 million following the disposal of the Munich Rupert Mayer
Strasse asset. The facility is secured over nine property
assets.
On 1 August 2019 the Group repaid a total of EUR16.8 million
including EUR10.1 million recorded within liabilities directly
associated with assets held for sale as at 31 March 2019, following
the disposal of two assets that acted as security for the loan into
the Titanium Venture with AXA Investment Managers - Real Assets.
The remaining facility is now secured over seven property assets.
No changes to the terms of the facility have occurred during the
six month period ended 30 September 2020.
Berlin Hyp AG
On 20 October 2016, the Group concluded an agreement with Berlin
Hyp AG to refinance and extend a facility which had an outstanding
balance of EUR39.2 million at 30 September 2016. The new facility
totals EUR70.0 million and terminates on 29 October 2023.
Amortisation is 2.5% per annum with the remainder due at maturity.
The facility is charged with an all-in fixed interest rate of 1.48%
for the full term of the loan. The facility is secured over six
property assets. The loan is subject to various covenants with
which the Group has complied. During the prior period the facility
was incorporated into the agreement that was entered into on 13
September 2019 as detailed below. As a result, the maturity date of
the loan was extended to 31 October 2023 with all other conditions
remaining unchanged.
On 13 September 2019, the Group agreed to a facility agreement
with Berlin Hyp AG for EUR115.4 million. The loan terminates on 31
October 2023. Amortisation is 1.25% per annum with the remainder
due in the fourth year. The loan facility is charged at a fixed
interest rate of 0.90%. This facility is secured over nine property
assets. The facility is subject to various covenants with which the
Group has complied. No changes to the terms of the facility have
occurred during the six month period ended 30 September 2020.
Saarbrücken Sparkasse
On 28 March 2018, the Group agreed to a facility agreement with
Saarbrücken Sparkasse for EUR18.0 million. The loan terminates on
28 February 2025. Amortisation is 4.0% per annum with the remainder
due in one instalment on the final maturity date. The facility is
charged with an all-in fixed interest rate of 1.53% for the full
term of the loan. The facility is secured over one property asset
and is subject to various covenants with which the Group has
complied. No changes to the terms of the facility have occurred
during the six month period ended 30 September 2020.
Deutsche Pfandbriefbank AG
On 19 January 2019, the Group agreed to a facility agreement
with Deutsche Pfandbriefbank AG for EUR56.0 million. Tranche 1,
totalling EUR21.6 million, has been hedged at a rate of 1.40% until
31 December 2023 by way of an interest rate swap. A first drawdown
of tranche 3 totalling EUR0.5 million is charged at a fixed
interest rate of 1.20%. On 3 April 2019 tranche 2 was drawn down,
totalling EUR14.8 million, and has been hedged at a rate of 1.25%
until 31 December 2023 by way of an interest rate swap. On 28 June
2019 tranche 3 was drawn down, totalling EUR19.1 million. Tranche 3
has been hedged at a rate of 0.91% until 31 December 2023 by way of
an interest rate swap. The facility is secured over five property
assets and is subject to various covenants with which the Group has
complied. On 19 February 2020, the Group agreed to extend tranche
three of its existing facility by EUR6.5 million. The loan is
coterminous with the existing facility maturing in December 2023.
The loan is charged with a floating interest rate of 1.20% plus
three month EURIBOR (floored at zero). Amortisation is 2% per annum
with the remainder due in one instalment on the final maturity
date. No changes to the terms of the facility have occurred during
the six month period ended 30 September 2020.
Schuldschein
On 2 December 2019, the Group agreed new loan facilities in the
form of an unsecured Schuldschein for EUR20.0 million. On 25
February 2020 the Group agreed new loan facilities in the form of
an unsecured Schuldschein for EUR30.0 million. In total the
unsecured facilities amount to EUR50.0 million spread over five
tranches and are charged with a blended interest rate of 1.60% and
have an average maturity of 3.2 years with no amortisation. As at
30 September 2020 the whole loan of EUR50.0 million had been drawn
down.
21. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts
and fair values of all of the Group's financial instruments that
are carried in the financial statements (excluding assets held for
sale):
Unaudited
30 September
2020 31 March 2020
----------------- -----------------
Fair
value Carrying Fair Carrying Fair
hierarchy amount value amount value
level EUR000 EUR000 EUR000 EUR000
---------------------------------------- ---------- -------- ------- -------- -------
Financial assets
Cash and cash equivalents 128,429 128,429 121,263 121,263
Trade and other receivables 11,625 11,625 12,354 12,354
Loans to associates 2 37,204 37,204 37,204 35,948
Derivative financial instruments 2 46 46 89 89
---------------------------------------- ---------- -------- ------- -------- -------
Financial liabilities
Trade and other payables 21,228 21,228 34,723 34,723
Derivative financial instruments 2 1,456 1,456 1,368 1,368
Interest-bearing loans and borrowings*:
Floating rate borrowings 2 28,591 28,591 28,661 28,661
Floating rate borrowings - hedged** 2 98,688 98,688 99,726 99,726
Floating rate borrowings - capped** 2 36,100 36,100 36,480 36,480
Fixed rate borrowings 2 336,822 340,734 320,887 323,319
---------------------------------------- ---------- -------- ------- -------- -------
* Excludes loan issue costs.
** The Group holds interest rate swap contracts and a cap
contract designed to manage the interest rate and liquidity risks
of expected cash flows of its borrowings with the variable rate
facilities with Bayerische Landesbank, SEB AG and Deutsche
Pfandbriefbank AG. Please refer to note 20 for details of swap and
cap 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 table 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 and interest rate
cap contracts. The interest rate swap contract is reset on a
quarterly basis, the cap contract on a half year 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 value of the interest rate
cap reflects the mark to market valuation with changes recognised
in the 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.
22. Issued share capital
Share
Number capital
Authorised of shares EUR
------------------------------- ---------- --------
Ordinary shares of no par value Unlimited -
------------------------------- ---------- --------
As at 30 September 2020 and 31
March 2020 Unlimited -
------------------------------- ---------- --------
Share
Number capital
Issued and fully paid of shares EUR
----------------------------------------------- ------------- --------
As at 31 March 2019 1,022,140,875 -
Issued ordinary shares 8,774,368 -
Issued Treasury Shares - -
Shares issued to Employee Benefit Trust (1,500,000) -
----------------------------------------------- ------------- --------
As at 30 September 2019 1,029,415,243 -
Issued ordinary shares 7,454,578 -
Issued Treasury Shares - -
Shares issued to Employee Benefit Trust (612,720) -
----------------------------------------------- ------------- --------
As at 31 March 2020 1,036,257,101 -
Issued ordinary shares 6,981,451 -
Issued Treasury Shares - -
Shares issued to Employee Benefit Trust (1,883,980) -
Shares allocated by the Employee Benefit Trust 312,092 -
----------------------------------------------- ------------- --------
As at 30 September 2020 1,041,666,664 -
----------------------------------------------- ------------- --------
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 8 June 2020, the
Company issued 6,981,451 ordinary shares at an issue price of
GBP0.76542 resulting in the Company's overall issued share capital
being 1,045,351,272 ordinary shares.
During the period 1,883,980 shares were acquired and 312,092
were allocated by the Employee Benefit Trust. A total of 3,684,608
shares at share price of EUR0.7878 are held by the Employee Benefit
Trust (31 March 2020: 2,112,720 shares at share price of
EUR0.7179). The total number of shares with voting rights was
1,045,351,272 (31 March 2020: 1,038,369,821). No votes are cast in
respect of the shares held in the Employee Benefit Trust in
connection with the Company's share plans and dividends paid and
payable are subject to a standing waiver.
All shares issued in the period were issued under general
authority. No shares were bought back in the period (31 March 2020:
none).
23. Other reserves
Other distributable reserve
The other distributable reserve was created for the payment of
dividends, share-based payment transactions and the buyback of
shares and is EUR459,004,000 in total at 30 September 2020 (31
March 2020: EUR470,151,000).
24. Dividends
On 1 June 2020, the Company announced a dividend of 1.80c per
share, with a record date of 10 July 2020 for UK and South African
shareholders and payable on 20 August 2020. On the record date,
1,038,369,821 shares were in issue with none held in treasury and
1,038,369,821 were entitled to participate in the dividend. Holders
of 335,705,489 shares elected to receive the dividend in ordinary
shares under the scrip dividend alternative, representing a
dividend of EUR6,043,000, while holders of 700,213,704 shares opted
for a cash dividend with a value of EUR12,603,000. The Company's
Employee Benefit Trust waived its rights to the dividend, reducing
the cash payable to EUR12,595,000. The total dividend at settlement
date was EUR18,638,000.
The Group's profit attributable to the equity holders of the
Company for the six months to 30 September 2020 was EUR56.5 million
(30 September 2019: EUR70.2 million). The Board has declared a
dividend relating to the six month period ended 30 September 2020
of 1.82c per share, representing 65% of FFO*. The dividend will be
paid on 21 January 2021, with the ex-dividend dates being 15
December 2020 for shareholders on the South African register and 17
December 2020 for shareholders on the UK register. It is intended
that dividends will continue to be paid on a semi-annual basis and
offered to shareholders in cash or scrip form.
* Adjusted profit before tax adjusted for depreciation,
amortisation of financing fees, adjustments in respect to IFRS 16,
adjustments related to associates, current tax receivable/incurred
and tax relating to disposals.
The dividend per share was calculated as follows:
Unaudited Unaudited
six months six month
ended ended
30 September 30 September
2020 2019
EURm EURm
------------------------------------------------------ ------------- -------------
Reported profit before tax 62.2 79.7
Adjustments for:
Gain on revaluation of investment properties (31.9) (58.2)
Deficit on revaluation relating to leased investment
properties (1.6) -
Gain on disposals of properties - -
Gain on loss of control of subsidiaries - (6.3)
Share of profit of an associate - (0.3)
Deduct revaluation gain on investment property from
associates (1.3) -
Other adjusting items* 1.6 9.9
Change in fair value of financial derivatives 0.1 1.1
------------------------------------------------------ ------------- -------------
Adjusted profit before tax 29.1 25.8
Adjustments for:
Funds from operation of investment in associates - 0.3
Depreciation and amortisation (excluding depreciation
relating to IFRS 16) 0.8 0.7
Amortisation of financing fees 0.8 0.7
Adjustment in respect of IFRS 16 (1.0) -
Current taxes incurred (see note 9) (0.9) (0.5)
Add back current tax relating to disposals and prior
year adjustments 0.3 -
------------------------------------------------------ ------------- -------------
Funds from operations, year ended 31 March n/a n/a
------------------------------------------------------ ------------- -------------
Funds from operations, six months ended 30 September 29.1 27.1
------------------------------------------------------ ------------- -------------
Funds from operations, six months ended 31 March n/a n/a
------------------------------------------------------ ------------- -------------
Dividend pool, six months ended 30 September** 19.0 18.2
------------------------------------------------------ ------------- -------------
Dividend pool, six months ended 31 March n/a n/a
------------------------------------------------------ ------------- -------------
Dividend per share, six months ended 30 September 1.82c 1.77c
------------------------------------------------------ ------------- -------------
Dividend per share, six months ended 31 March n/a n/a
------------------------------------------------------ ------------- -------------
* Includes expense relating to share awards and Covid-19 related
costs. See note 10 for details.
** Calculated as 65% of FFO of 2.80c per share (30 September
2019: 2.65c per share using 67% of FFO; 31 March 2020: 2.77c per
share using 65% of FFO), based on average number of shares
outstanding of 1,037,394,967 (30 September 2019:1,023,014,308; 31
March 2020: 1,032,748,723).
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.
25. Related parties
Related parties are defined as those persons and companies that
control the Group, or that are controlled, jointly managed, or
subject to significant influence by the Group.
The following balances and transactions with associates exist as
at the reporting date:
Unaudited Year ended
30 September 31 March
Consolidated statement of financial 2020 2020
position EUR000 EUR000
------------------------------------ ------------- ----------
Loans to associates 37,204 37,204
Trade and other receivables 1,444 842
------------------------------------ ------------- ----------
Total 38,648 38,046
------------------------------------ ------------- ----------
Unaudited Unaudited
six months six month
ended ended
30 September 30 September
Consolidated statement of comprehensive 2020 2019
income EUR000 EUR000
---------------------------------------- ------------- -------------
Services supplied 1,045 268
Interest income 1,302 184
---------------------------------------- ------------- -------------
Total 2,347 452
---------------------------------------- ------------- -------------
Services provided to related parties primarily relate to the
provision of property and asset management services.
26. Capital and other commitments
As at 30 September 2020, the Group had contracted capital
expenditure for development and enhancements on existing properties
of EUR10,912,000 (31 March 2020: EUR12,085,000) and a capital
commitment in relation to the notarised asset in Norderstedt in
amount of EUR9,100,000.
These were committed but not yet been provided for in the
financial statements.
27. Post balance sheet events
On 19 October 2020, the Group repaid in full the Bayern LB
facility that had a remaining outstanding balance of EUR22.8
million.
On 2 November 2020 the German government announced additional
measures relating to the Covid-19 pandemic. To date, the Group's
operations have not been impacted.
Business analysis
Non-IFRS measures
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
--------------------------------------------------------- ------------- -------------
Total comprehensive income for the period attributable
to the owners of the Company 56,549 70,216
Gain on revaluation of investment properties (31,909) (58,178)
(Gain)/loss on disposal of properties (net of related
tax) 161 (33)
Gain on loss of control of subsidiaries (net of
related tax) - (6,323)
Add finance restructuring costs - 9,107
Change in fair value of derivative financial instruments 132 1,067
Deferred tax in respect of EPRA adjustments 4,674 8,994
NCI in respect of the above 46 29
Deduct revaluation surplus relating to investment
in associates (1,673) (22)
Tax in relation to the above 346 64
--------------------------------------------------------- ------------- -------------
EPRA earnings 28,326 24,921
--------------------------------------------------------- ------------- -------------
Add change in deferred tax relating to derivative
financial instruments 52 70
Add change in fair value of derivative financial
instruments (132) (1,067)
Deduct finance restructuring costs - (9,107)
NCI in respect of the above - -
--------------------------------------------------------- ------------- -------------
Headline earnings after tax 28,246 14,817
--------------------------------------------------------- ------------- -------------
Add change in fair value of derivative financial
instruments (net of related tax) 80 997
Deduct revaluation expense relating to leased investment
properties (1,617) -
Add adjusting items* (net of related tax) 1,613 9,943
--------------------------------------------------------- ------------- -------------
Adjusted earnings after tax 28,322 25,757
--------------------------------------------------------- ------------- -------------
* See note 10 of the Interim Report.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2020 2019
EUR000 EUR000
------------------------------------------- ------------- -------------
EPRA earnings 28,326 24,921
Weighted average number of ordinary shares 1,037,394,967 1,023,014,308
------------------------------------------- ------------- -------------
EPRA earnings per share (cents) 2.73 2.44
------------------------------------------- ------------- -------------
Headline earnings after tax 28,246 14,817
Weighted average number of ordinary shares 1,037,394,967 1,023,014,308
------------------------------------------- ------------- -------------
Headline earnings per share (cents) 2.72 1.45
------------------------------------------- ------------- -------------
Adjusted earnings after tax 28,322 25,757
Weighted average number of ordinary shares 1,037,394,967 1,023,014,308
------------------------------------------- ------------- -------------
Adjusted earnings per share (cents) 2.73 2.51
------------------------------------------- ------------- -------------
Original capex investment programmes
Annualised
Annualised rent roll Rate
rent roll increase Occupancy Rate per sqm
Investment Actual increase achieved to achieved to per sqm achieved to
Original capex investment budgeted spend budgeted September 2020 Occupancy September 2020 budgeted September 2020
programme progress* sqm EURm EURm EURm EURm budgeted % % EUR EUR
-------------------------- ------- ---------- ------ ---------- ---------------- --------------- ---------------- --------- ---------------
Completed 200,623 26.0 24.4 10.6 12.5 79 80 5.57 6.48
In progress 2,242 0.3 0.1 0.1 - 80 - 4.60 -
To commence in next
financial year 2,277 0.4 - 0.1 - 80 - 5.00 -
-------------------------- ------- ---------- ------ ---------- ---------------- --------------- ---------------- --------- ---------------
Total 204,142 26.7 24.5 10.8 12.5 79 - 5.55 -
-------------------------- ------- ---------- ------ ---------- ---------------- --------------- ---------------- --------- ---------------
*For disposals and non-core assets the final position before
completion of the sale is included.
Annex 1 - non-IFRS measures
Basis of preparation
The Directors of Sirius Real Estate Limited ("Sirius") have
chosen to disclose additional non-IFRS measures; these include EPRA
earnings, adjusted net asset value, EPRA net reinstatement value,
EPRA net tangible assets, EPRA net disposal value, adjusted profit
before tax and funds from operations (collectively "Non-IFRS
Financial Information").
The Directors have chosen to disclose:
-- EPRA earnings in order to assist in comparisons with similar
businesses in the real estate sector. EPRA earnings is a definition
of earnings as set out by the European Public Real Estate
Association. EPRA earnings represents earnings after adjusting for
revaluation of investment properties, changes in fair value of
derivative financial instruments, profits and losses on disposals
of properties (net of related tax), the gain on loss of control of
subsidiaries (net of related tax), finance restructuring costs,
(collectively the "EPRA earnings adjustments"), the resulting tax
adjustments, deferred tax in respect of the EPRA earnings
adjustments, NCI in respect of relating to gain on revaluation and
gain on sale of properties net of related tax, revaluation gain on
investment property relating to associates and the related tax
thereon. The reconciliation between basic and diluted earnings and
EPRA earnings is detailed in table A below.
-- Adjusted net asset value in order to assist in comparisons
with similar businesses. Adjusted net asset value represents net
asset value after adjusting for derivative financial instruments
and deferred tax relating to valuation movements, derivative
financial instruments and LTIP valuation. The reconciliation for
adjusted net asset value is detailed in table B below.
-- EPRA net reinstatement value ("EPRA NRV") in order to assist
in comparisons with similar businesses in the real estate sector.
EPRA NRV is a definition of net asset value as set out by the
European Public Real Estate Association. EPRA NRV represents net
asset value after adjusting for derivative financial instruments,
deferred tax relating to valuation movements and derivatives and
real estate transfer tax presented in the Valuation Certificate
(for the entire consolidated Group including wholly owned entities
and investment in associates). The reconciliation for EPRA NRV is
detailed in table C below.
-- EPRA net tangible assets ("EPRA NTA") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA
NTA is a definition of net asset value as set out by the European
Public Real Estate Association. EPRA NTA represents net asset value
after adjusting for derivative financial instruments, deferred tax
relating to valuation movements (excluding that relating to assets
held for sale), goodwill and intangible assets as per the 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 goodwill as per the statement of financial
position and the fair value of fixed interest rate debt. The
reconciliation for EPRA NDV is detailed in table C below.
-- Adjusted profit before tax in order to provide an alternative
indication of Sirius Real Estate Limited and its subsidiaries' (the
"Group") underlying business performance. Accordingly, it excludes
the effect of the gain on revaluation of investment properties,
other adjusting items, gains/losses on sale of properties, change
in fair value of financial derivatives, gain on loss of control of
subsidiaries, revaluation gain on investment property relating to
associates, share of profit of associate and adjustment on
revaluation in respect of IFRS 16. The reconciliation for adjusted
profit before tax is detailed in table D below.
-- Funds from operations in order to assist in comparisons with
similar businesses and to facilitate the Group's dividend policy
which is derived from funds from operations. Accordingly, it
excludes funds from operations of investment in associates,
depreciation and amortisation (excluding depreciation relating to
IFRS 16), amortisation of financing fees, adjustment in respect of
IFRS 16 and current tax excluding prior year adjustments and tax on
disposals. The reconciliation for funds from operations is detailed
in table D below.
The Non-IFRS Financial Information has not been prepared using
the accounting policies of Sirius and does not comply with IFRS.
The Non-IFRS Financial Information is presented in accordance with
the JSE Listing Requirements and the guide on pro forma financial
information issued by SAICA. The Non-IFRS Financial Information is
the responsibility of the Directors. The Non-IFRS Information has
been presented for illustrative purposes and, due to its nature,
may not fairly present the Group's financial position or result of
operations.
The Non-IFRS measures included in the Interim Report 2020 have
not been reviewed nor reported on by the independent reporting
accountant.
Table A - EPRA earnings
Unaudited Unaudited
30 September 30 September
2020 2019
EUR000 EUR000
---------------------------------------- ------------- -------------
Basic and diluted earnings attributable
to owners of the Company(1) 56,549 70,216
Gain on revaluation of investment
properties2 (31,909) (58,178)
(Gain)/loss on disposal of properties
(net of related tax)3 161 (33)
Gain on loss of control of subsidiaries
(net of related tax)4 - (6,323)
Add finance restructuring costs5 - 9,107
Change in fair value of derivative
financial instruments6 132 1,067
Deferred tax in respect of EPRA
adjustments7 4,674 8,994
NCI in respect of the above8 46 29
Deduct revaluation surplus relating
to investment in associates9 (1,673) (22)
Tax in relation to the above10 346 64
---------------------------------------- ------------- -------------
EPRA earnings 11 28,326 24,921
---------------------------------------- ------------- -------------
Notes:
1. Row 1 presents the profit and total comprehensive income
attributable to owners of the Company which has been extracted from
the unaudited consolidated statement of comprehensive income within
the condensed set of consolidated financial statements for the six
months ended 30 September 2020 (the "consolidated financial
statements").
2. Row 2 presents the gain on revaluation of investment
properties reported in the statement of comprehensive income which
has been extracted from note 12 within the consolidated financial
statements.
3. Row 3 presents the gain or loss on disposal of properties
(net of related tax) which has been extracted from the consolidated
statement of comprehensive income within the consolidated financial
statements.
4. Row 4 presents the gain on loss of control of subsidiaries
(net of related tax) reported in the statement of comprehensive
income within the consolidated financial statements.
5. Row 5 presents the finance restructuring costs which have
been extracted from note 8 of the consolidated financial
statements.
6. Row 6 presents the change in fair value of derivative
financial instruments which has been extracted from the
consolidated statement of comprehensive income within the
consolidated financial statements.
7. Row 7 presents deferred tax relating to origination and
reversal of temporary differences of the EPRA earnings adjustments
which has been extracted from note 9 of the consolidated financial
statements.
8. Row 8 presents the non-controlling interest relating to gain
on revaluation and gain on sale of properties net of related tax
which has been extracted from note 10 of the consolidated financial
statements.
9. Row 9 presents the gain on revaluation of investment
properties relating to investment in associates.
10. Row 10 presents deferred tax relating to origination and
reversal of temporary differences relating to investment in
associates.
11. Row 11 presents the EPRA earnings for the period ended 30
September 2020.
Table B - Adjusted net asset value
Unaudited
30 September 31 March
2020 2020
EUR000 EUR000
------------------------------------------ ------------- --------
Net asset value
Net asset value for the purpose
of assets per share (assets attributable
to the owners of the Company)1 845,584 801,570
Deferred tax arising on revaluation
gain, derivative financial instruments
and LTIP valuation2 46,824 42,151
Derivative financial instruments
at fair value3 1,410 1,279
------------------------------------------ ------------- --------
Adjusted net asset value attributable
to owners of the Company 4 893,818 845,000
------------------------------------------ ------------- --------
Notes:
1. Row 1 presents net asset value for the purpose of assets per
share (assets attributable to the owners of the Company) which has
been extracted from the consolidated financial statements.
2. Row 2 presents deferred tax expense arising on revaluation
gains of EUR46,903,000 and a credit of EUR79,000 arising on
derivative financial instruments which has been extracted from note
9 of the consolidated financial statements. There is no deferred
tax on the LTIP valuation.
3. Row 3 presents current derivative financial instrument assets
of EUR46,000 less current derivative financial instrument
liabilities of EUR430,000 less non-current derivative financial
instrument liabilities of EUR1,026,000 as extracted from the
consolidated statement of financial position from the consolidated
financial statements.
4. Row 4 presents the adjusted net asset value as at 30 September 2020.
Table C - EPRA net asset measures
EPRA NRV EPRA NTA EPRA NDV EPRA NAV
--------------------------------------------- ------------- ------------- -----------------
New measures Previous measure
--------------------------------------------------------------------------- -----------------
30 September 30 September 30 September 30 September
2020 2020 2020 2020
EUR 000 EUR 000 EUR 000 EUR 000
--------------------------------------------- ------------- ------------- -----------------
Net asset value at the end
of period (basic)(1) 845,584 845,584 845,584 845,584
---------------------------------- ---------- ------------- ------------- -----------------
Diluted EPRA net asset value
at fair value 845,584 845,584 845,584 845,584
---------------------------------- ---------- ------------- ------------- -----------------
Group
Derivative financial instruments
at fair value(2) 1,410 1,410 n/a 1,410
Deferred tax in respect of
EPRA adjustments(3) 46,824 46,824* n/a 46,824
Goodwill as per the statement
of financial position(4) n/a (3,738) (3,738) n/a
Intangibles as per the statement
of financial position(5) n/a (2,203) n/a n/a
Fair value of fixed interest
rate debt(6) n/a n/a (3,912) n/a
Real estate transfer tax(7) 96,966 n/a n/a n/a
Investment in associate n/a
Deferred tax in respect of
EPRA adjustments3(*) 4,686 4,686* n/a n/a**
Real estate transfer tax(7) 6,511 n/a n/a n/a
---------------------------------- ---------- ------------- ------------- -----------------
Total EPRA NRV, NTA, NDV and
NAV(8) 1,001,981 892,563 837,934 893,818
---------------------------------- ---------- ------------- ------------- -----------------
EPRA NRV EPRA NTA EPRA NDV EPRA NAV
------------------------------------------- --------- --------- -----------------
New measures Previous measure
----------------------------------------------------------------- -----------------
31 March 31 March 31 March
2020 2020 2020 31 March 2020
EUR 000 EUR 000 EUR 000 EUR 000
------------------------------------------- --------- --------- -----------------
Net asset value at the end of
period (basic)(1) 801,570 801,570 801,570 801,570
---------------------------------- -------- --------- --------- -----------------
Diluted EPRA net asset value
at fair value 801,570 801,570 801,570 801,570
---------------------------------- -------- --------- --------- -----------------
Group
Derivative financial instruments
at fair value(2) 1,279 1,279 n/a 1,279
Deferred tax in respect of EPRA
adjustments(3) 42,151 41,668 n/a 42,151
Goodwill as per the statement
of financial position(4) n/a (3,738) (3,738) n/a
Intangibles as per the statement
of financial position(5) n/a (1,986) n/a n/a
Fair value of fixed interest
rate debt(6) n/a n/a (3,688) n/a
Real estate transfer tax(7) 93,810 n/a n/a n/a
Investment in associate n/a
Deferred tax in respect of EPRA
adjustments(3) 4,337 4,337* n/a n/a**
Real estate transfer tax(7) 6,322 n/a n/a n/a
---------------------------------- -------- --------- --------- -----------------
Total EPRA NRV, NTA, NDV and
NAV(8) 949,469 843,130 794,144 845,000
---------------------------------- -------- --------- --------- -----------------
*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 30 September 2020.
** While the previous definition of EPRA NAV included this
adjustment, in prior periods it has not been considered
sufficiently material to adjust. As the value of this difference is
expected to become more material in future periods, the adjustment
will now be included in the calculation of the EPRA measures where
appropriate.
Notes:
1. Row 1 presents net asset value extracted from note 11 of the
consolidated financial statements.
2. Row 2 presents current derivative financial instrument assets
of EUR46,000 less current derivative financial instrument
liabilities of EUR430,000 less non-current derivative financial
instrument liabilities of EUR1,026,000 as extracted from the
consolidated statement of financial position from the consolidated
financial statements.
3. Row 3 presents deferred tax expense arising on revaluation
gains of EUR46,903,000 and a credit of EUR79,000 arising on
derivative financial instruments which has been extracted from note
9 of the consolidated financial statements and the deferred tax
expense arising on revaluation gains of EUR4,686,000 related to the
investment in associates.
4. Row 4 presents the book value of goodwill reported in the
statement of financial position within the consolidated financial
statements.
5. Row 5 presents the book value of software in the amount of
EUR2,066,000 and of licences in the amount of EUR137,000.
6. Row 6 presents the fair value of financial liabilities and
assets on the statement of financial position, net of any related
deferred tax.
7. Row 7 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.
8. Row 8 presents the EPRA net asset value, EPRA NRV, EPRA NTA
and EPRA NDV, respectively, as at 30 September 2020. The EPRA net
asset value measurement is no longer recognised by EPRA guidelines
from periods commencing in January 2020. The measurement has been
retained to provide a bridge between the previous EPRA NAV metric
and the new EPRA NRV, NTA and NDV metrics.
Table D - Adjusted profit before tax and funds from
operations
Unaudited Unaudited
30 September 30 September
2020 2019
EURm EURm
------------------------------------------------------ ------------- -------------
Reported profit before tax 1 62.2 79.7
Adjustments for:
Gain on revaluation of investment properties2 (31.9) (58.2)
Deficit on revaluation relating to leased investment
properties3 (1.6) -
Gain on disposals of properties4 - -
Gain on loss of control of subsidiaries5 - (6.3)
Share of profit of an associate6 - (0.3)
Deduct revaluation gain on investment property from
associates7 (1.3) -
Other adjusting items8 1.6 9.9
Change in fair value of financial derivatives9 0.1 1.1
------------------------------------------------------ ------------- -------------
Adjusted profit before tax 10 29.1 25.8
Adjustments for:
Funds from operations of investment in associates11 - 0.3
Depreciation and amortisation (excluding depreciation
relating to IFRS 16)12 0.8 0.7
Amortisation of financing fees13 0.8 0.7
Adjustment in respect of IFRS 1614 (1.0) -
Current taxes incurred (see note 9)15 (0.9) (0.5)
Add back current tax relating to disposals and prior
year adjustments16 0.3 -
------------------------------------------------------ ------------- -------------
Funds from operations 17 29.1 27.1
------------------------------------------------------ ------------- -------------
Notes:
1. Row 1 presents profit before tax which has been extracted
from the consolidated financial statements.
2. Row 2 presents the gain on revaluation of investment
properties reported in the statement of comprehensive income which
has been extracted from note 12 of the consolidated financial
statements.
3. Row 3 presents the deficit on revaluation relating to
capitalised head leases which has been extracted from note 12 of
the consolidated financial statements.
4. Row 4 presents the gain or loss on disposal of properties
which has been extracted from the consolidated statement of
comprehensive income within the consolidated financial
statements.
5. Row 5 presents the gain on loss of control of subsidiaries
(including tax) reported in the statement of comprehensive income
within the consolidated financial statements.
6. Row 6 presents the share of profit of investment in
associates which has been extracted from the consolidated statement
of comprehensive income within the consolidated financial
statements.
7. Row 7 presents the adjustment to the share of profit of
investments consolidated in the financial statements for
non-operational effects.
8. Row 8 presents other adjusting items of EUR1.4 million
relating to the LTIP and SIP expense extracted from note 10 and
EUR0.2 million Covid-19 related costs extracted from note 10.
9. Row 9 presents the change in fair value of derivative
financial instruments which has been extracted from the
consolidated statement of comprehensive income within the
consolidated financial statements.
10. Row 10 presents the adjusted profit before tax for the
period ended 30 September 2020 and the period ended 30 September
2019.
11. Row 11 presents the share of funds from operations of
investment in associates which is the total profit for the period
of the associates adjusted for revaluation gains and the related
tax, finance fees and depreciation.
12. Row 12 presents depreciation and amortisation as extracted
from note 5 of the consolidated financial statements.
13. Row 13 presents amortisation of capitalised finance costs
which has been extracted from note 8 of the consolidated financial
statements.
14. Row 14 presents the differential between the expense
recorded in the statement of comprehensive income for the period
ended 30 September 2020 relating to head leases in accordance with
IFRS 16 amounting to EUR2.0 million and the actual cash expense
recorded in the statement of cash flow for the period ended 30
September 2020 amounting to EUR3.0 million.
15. Row 15 presents the total current income tax which has been
extracted from note 9 of the consolidated financial statements.
16. Row 16 presents the add-back of current tax relating to
disposals and prior year adjustments extracted from note 9 of the
consolidated financial statements.
17. Row 17 presents the funds from operations for the period
ended 30 September 2020 and the period ended 30 September 2019.
Glossary of terms
Adjusted earnings is the earnings attributable to
the owners of the Company, excluding
the effect of adjusting items net
of related tax, gains/losses on
sale of properties net of related
tax, the revaluation deficits/surpluses
on the investment properties (also
to associates) net of related tax,
profits and losses on disposals
of properties net of related tax,
changes in fair value of derivative
financial instruments net of related
tax, gain on loss of control of
subsidiaries net of related tax,
finance restructuring costs net
of related tax and adjustment on
revaluation expense relating to
leased investment properties
---------------------- -----------------------------------------------------------
Adjusted net is the assets attributable to the
asset value equity owners of the Company adjusted
for derivative financial instruments
and deferred tax arising on revaluation
gain, financial derivative instruments
and LTIP valuation
---------------------- -----------------------------------------------------------
Adjusted profit is the reported profit before tax
before tax adjusted for gain on revaluation
of investment properties, gains/losses
on sale of properties, changes
in fair value of derivative financial
instruments, other adjusting items,
gain on loss of control of subsidiaries,
revaluation gain on investment
property relating to associates
and adjustment on revaluation in
respect of IFRS 16
---------------------- -----------------------------------------------------------
Annualised acquisition is the income generated by a property
net less directly attributable costs
operating income 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
rent roll of a property at 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
roll of a property at a specific reporting
date expressed in annual terms.
Unless stated otherwise the reporting
date is 30 September 2020. Annualised
rent roll should not be interpreted
nor used as a forecast or estimate.
Annualised rent roll differs from
rental income described in note
4 of the Interim Report and reported
within revenue in the consolidated
statement of comprehensive income
for reasons including:
* annualised rent roll represents contracted rental
income at a specific point in time expressed in
annual terms;
* rental income as reported within revenue represents
rental income recognised in the period under review;
and
* rental income as reported within revenue includes
accounting adjustments including those relating to
lease incentives.
---------------------- -----------------------------------------------------------
Capital value is the market value of a property
divided by the total sqm of a property
---------------------- -----------------------------------------------------------
Cumulative total is the return calculated by combining
return the movement in investment property
value net of capex with the total
net operating income less bank
interest over a specified period
of time
---------------------- -----------------------------------------------------------
EPRA earnings is earnings after adjusting for
property revaluation, changes in
fair value of derivative financial
instruments, profits and losses
on disposals (collectively the
"EPRA earnings adjustments"), the
gain on loss of control of subsidiaries,
finance restructuring costs, revaluation
gain on investment property relating
to associates, the resulting tax
adjustments and deferred tax in
respect of these EPRA earnings
adjustments
---------------------- -----------------------------------------------------------
EPRA net asset is the net asset value after adjusting
value for derivative financial instruments
and deferred tax relating to valuation
movements and derivatives
---------------------- -----------------------------------------------------------
EPRA net reinstatement is the net asset value after adjusting
value for derivative financial instruments,
deferred tax relating to valuation
movements and derivatives and real
estate transfer tax presented in
the Valuation Certificate, including
the amounts of the above related
to the investment in associates
---------------------- -----------------------------------------------------------
EPRA net tangible is the net asset value after adjusting
assets for derivative financial instruments,
deferred tax relating to valuation
movements (just for the part of
the portfolio that the Company
intend to hold should be excluded)
and derivatives, goodwill and intangible
assets as per the statement of
financial position, including the
amounts of the above related to
the investment in associates
---------------------- -----------------------------------------------------------
EPRA net disposal is the net asset value after adjusting
value for goodwill as per the statement
of financial position and the fair
value of fixed interest rate debt
---------------------- -----------------------------------------------------------
EPRA net initial is the annualised rent roll based
yield on the cash rents passing at the
statement of financial position
date, less non-recoverable property
operating expenses, divided by
the market value of the property,
increased by (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
---------------------- -----------------------------------------------------------
Funds from operations is adjusted profit before tax adjusted
for depreciation and amortisation
(excluding depreciation relating
to IFRS 16), amortisation of financing
fees, adjustment in respect of
IFRS 16 and current tax excluding
prior year adjustments and tax
on disposals
---------------------- -----------------------------------------------------------
Geared IRR is an estimate of the rate of return
taking into consideration debt
---------------------- -----------------------------------------------------------
Gross loan to is the ratio of principal value
value ratio of total debt to the aggregated
value of investment property
---------------------- -----------------------------------------------------------
Like for like refers to the manner in which metrics
are subject to adjustment in order
to make them directly comparable.
Like-for-like adjustments are made
in relation to annualised rent
roll, rate and occupancy and eliminate
the effect of asset acquisitions
and disposals that occur in the
reporting period
---------------------- -----------------------------------------------------------
Net loan to value is the ratio of principal value
ratio of total debt less cash, excluding
that which is restricted, to the
aggregate value of investment property
---------------------- -----------------------------------------------------------
Net operating is the rental and other income
income from investment properties generated
by a property less directly attributable
costs
---------------------- -----------------------------------------------------------
Net yield is the net operating income generated
by a property expressed as a percentage
of its value
---------------------- -----------------------------------------------------------
Occupancy is the percentage of total lettable
space occupied as at reporting
date
---------------------- -----------------------------------------------------------
Operating cash is an estimate of the rate of return
flow on investment based on operating cash flows and
(geared) taking into consideration debt
---------------------- -----------------------------------------------------------
Operating cash is an estimate of the rate of return
flow on investment based on operating cash flows
(ungeared)
---------------------- -----------------------------------------------------------
Rate is rental income per sqm expressed
on a monthly basis as at a specific
reporting date
---------------------- -----------------------------------------------------------
Total debt is the aggregate amount of the
Company's interest-bearing loans
and borrowings
---------------------- -----------------------------------------------------------
Total shareholder is the return obtained by a shareholder
accounting return calculated by combining both movements
in adjusted NAV per share plus
dividends paid
---------------------- -----------------------------------------------------------
Total return is the return for a set period
of time combining valuation movement
and income generated
---------------------- -----------------------------------------------------------
Ungeared IRR is an estimate of the rate of return
---------------------- -----------------------------------------------------------
Weighted average is the weighted effective rate
cost of debt of interest of loan facilities
expressed as a percentage
---------------------- -----------------------------------------------------------
Weighted average is the weighted average time to
debt expiry repayment of loan facilities expressed
in years
---------------------- -----------------------------------------------------------
Corporate directory
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company number: 46442
JSE Share Code: SRE
LSE (EUR) Share Code: ESRE
LSE (GBP) Share Code: SRE
ISIN Code: ISIN GG00B1W3VF54
Registered office
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
Registered number
Incorporated in Guernsey under the Companies (Guernsey) Law,
2008, as amended, under number 46442
Company Secretary
A Gallagher
Sirius Real Estate Limited
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
UK solicitors
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
Financial PR
FTI Consulting LLP
Aldersgate Street
London EC1A 4HD
JSE sponsor
PSG Capital Proprietary Limited
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch
7600
South Africa
Joint broker
Peel Hunt LLP
120 London Wall
London EC2Y 5ET
Joint broker
Berenberg
60 Threadneedle Street
London EC2R 8HP
Property valuer
Cushman & Wakefield LLP
Rathenauplatz 1
60313 Frankfurt am Main
Germany
Independent auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
United Kingdom
Guernsey solicitors
Carey Olsen
PO Box 98
7 New Street
St Peter Port
Guernsey GY1 4BZ
Channel Islands
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END
IR FFFFILSLLFII
(END) Dow Jones Newswires
November 23, 2020 02:00 ET (07:00 GMT)
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