Wrap Text
Half Year Results for the six months ended 30 September 2015
Sirius Real Estate Limited
(Incorporated in Guernsey)
Company number: 46442
Share code: SRE
ISIN: GG00B1W3VF54
("Sirius", the "Group" or the "Company")
Half Year Results for the six months ended 30 September 2015
Sirius Real Estate, the leading operator of branded business parks providing conventional and flexible workspace to
the German market, is pleased to announce its half year results for the six months ended 30 September 2015.
Financial highlights
- Demand for Sirius' workspace continued to be strong and in spite of an expected but higher than usual
number of move-outs in the period, the like-for-like gross annualised rent roll increased to EUR50.1 million^
(31 March 2015: EUR50.0 million). Including acquisitions^^^ gross annualised rent roll increased to EUR53.4 million.
- Recurring profit before tax* increased to EUR8.6 million, with like-for-like^^ recurring profit before tax* increasing
by 35.3% to EUR6.9 million (2014: EUR5.1 million).
- Profit before tax (including property revaluations) increased to EUR28.3 million (2014: EUR15.3 million).
- Funds From Operations ("FFO")*** was EUR9.9 million (2014: EUR6.2 million), an increase of 60%. FFO per share
increased to 1.4c (2014: 1.2c) despite the acquisitions funded by the EUR50 million capital increase in June
making only a small contribution.
- Cost of debt reduced significantly during the period with the refinancing of the expensive Macquarie debt
facilities, through a new seven year EUR59 million facility from SEB AG with a fixed cost of 1.84% per annum.
This refinancing, which reduced the average cost of debt to the Group from 4.3% to 3.3%, will reduce interest
cost by EUR2.6 million per annum going forward.
- Valuation of the portfolio increased to EUR615.2 million (31 March 2015: EUR550.0 million) with the like-for-like
portfolio increasing by EUR31.4 million or 5.7% to EUR581.4 million^ in the six month period.
- Adjusted net asset value ("NAV")** per share increased by 5.5% to 50.13c (31 March 2015: 47.51c) despite
the payment of EUR7.6 million in early termination fees for the repayment of the Macquarie loans (equivalent to
1.0c reduction in NAV per share).
- Total Shareholder Return (based on Adjusted NAV), including the 0.84c per share final dividend paid in July,
of 7.3% in the six month period with the benefit of acquisitions and the significantly reduced interest cost only
impacting future periods.
- Rate per sqm of the portfolio increased to EUR4.85 with like-for-like rate per sqm increasing to
EUR4.91^ (31 March 2015: EUR4.75).
- Achieved new lettings in the period of 70,201 sqm at an average rate of EUR5.10 per sqm (3.87% above the average rate achieved
across the existing portfolio), with like-for-like lettings of 62,886 sqm^^ at an average rate of EUR4.86^^
(2014: 54,713 sqm at EUR5.11).
* Adjusted. See Note 22 of Notes to the Financial Statements for explanation.
** Excluding provisions for deferred tax and financial derivatives
*** Recurring profit after tax excluding depreciation and amortisation of bank debt facility fees
^ Excluding recent acquisitions in Ludwigsburg, Weilimdorf & Heidenheim
^^ Excluding acquisitions in Potsdam, Mahlsdorf, Aachen and Bonn and recent acquisitions in Ludwigsburg, Weilimdorf & Heidenheim
^^^ Acquisitions in Ludwigsburg, Weilimdorf & Heidenheim
0 Based on average shares outstanding for the period of 707,075,634
Placing and acquisitions
- In June, Sirius successfully completed a Private Placement raising EUR50 million of new equity capital. The purpose of the
new capital was to fund the acquisition of five mixed-use business parks and the early repayment of the two
Macquarie debt facilities mentioned above.
- The five assets were acquired in September and October 2015 from different vendors for a total consideration of
EUR57.24 million, including acquisition costs. A new EUR25.4 million 5-year debt facility was drawn down against four of
these assets in October 2015 with a fixed all-in interest rate through a swap of 1.66%.
Capex programme
- The capex programme has continued to progress with the transformation of a further 10,300 sqm of space
completing in the period and another 28,765 sqm is underway. Since the inception of the programme 48,160 sqm
of the circa 100,000 sqm of unlettable or under-rented space originally identified has been transformed and EUR2.3
million of the expected EUR4.0 million incremental annual rental income has been realised.
Dividend
- Dividend of 0.92c per share declared for the six months to 30 September 2015, with a scrip dividend alternative.
A detailed dividend announcement will be made in due course and the distribution of the scrip dividend circular
will follow the detailed dividend announcement.
Robert Sinclair, Chairman of Sirius, said, "This has been another good period for Sirius during which the
Company has performed strongly, raised EUR50 million in new capital and acquired five new sites. We have also
continued to grow the business organically through our capex investment programme which has transformed
another 10,300sqm of previously unlettable or under-rented space. The continuation of this, together with a
significant reduction in the cost of borrowings, places the Company in an excellent position as we head into
2016."
Andrew Coombs, Chief Executive of Sirius, said, "Sirius continues to progress in its goal of expanding its
asset base and increasing profitability across the Group. Alongside our important earnings-enhancing
acquisitions over the period, we are also strengthening our current offering through capital investment into
the existing portfolio. A stronger balance sheet and demonstrable track record has allowed the Company to
negotiate significantly improved lending terms, thereby materially reducing our cost of debt. The Board is
confident in its outlook for the full year and is focused on further improving returns to shareholders."
Enquiries:
Sirius Real Estate
Andrew Coombs, CEO +49 (0)30 285010110
Alistair Marks, CFO
Peel Hunt – Nomad and Joint Broker
Capel Irwin +44 (0)20 7418 8900
Hugh Preston
PSG Capital
David Tosi +27 (0)21 887 9602
Willie Honeyball
Canaccord Genuity Limited - Joint Broker
Bruce Garrow +44 (0)20 7523 8000
Chris Connors
Mark Whitmore
Novella
Tim Robertson +44 (0)20 3151 7008
Ben Heath
www.sirius-real-estate.com
Business Update
Introduction
The Company is pleased to announce the half-year results for the six months ended 30 September 2015.
It has been a busy and significant period of activity for the Company, benchmarked by the successful capital raise in June,
as a result of which five immediately earnings-enhancing sites have been added to the portfolio.
Underlying the trading performance is the strong demand for space across the German market which
helped the Company deliver an increase in like-for-like annualised rental income despite the expected and higher
than usual number of move-outs in the period. This included a further 3.4% increase in like-for-like rental rate
across the portfolio in the period, evidencing the success of our asset management efforts when compared to
Germany's otherwise very low inflation environment.
In June, the Company announced a EUR50 million equity fundraising at 46 cents per share to fund the acquisition of five
mixed use business parks. In addition to the acquisitions, part of the proceeds from the capital raise were used to
refinance our two most expensive debt facilities with a new 7-year EUR59 million debt facility with SEB AG. This
represents another milestone for Sirius and has significantly reduced the Company's finance costs. The new facility is
at a fixed interest rate of 1.84% for the full term of the facility, which was lower than expected. The exit costs
associated with the refinancing were EUR7.6 million but the benefit will be an interest cost saving of EUR2.6 million per
annum going forward.
A further uplift in the value of our property portfolio was recorded in the period, with the portfolio valued on a like-for-
like basis, excluding the recent acquisitions* at EUR581.4 million as at 30 September 2015 (31 March 2015: EUR550.0
million), an increase of EUR31.4 million or 5.7% in the six month period. The revaluation uplift reflects approximately
50 bps of yield compression. The effects of the capital investment programme in refurbishing previously unlettable space
offset the short-term impact of the extraordinary move-outs in the period. There remain two further large
move-outs on 11,980 sqm with rental income of EUR0.9 million expected in the second half of the financial year, the
largest being one of the last remaining Siemens vacations, however the Board is confident that with the pipeline of
new lettings in progress, Sirius should significantly increase its like-for-like rent roll in the second
half of the financial year ending 31 March 2016.
* Acquisitions being Ludwigsburg, Weilimdorf & Heidenheim
Earnings
For the half year under review, total income was EUR25.9 million (2014: EUR21.5 million) and profit before tax
was EUR28.3 million (2014: EUR15.3 million), which includes property revaluations. The recurring profit before tax*
for the period was EUR8.6 million (2014: EUR5.1 million). On a like-for-like basis recurring profit before tax* increased by
35.3% to EUR6.9 million on the same period last year. This increase has come predominantly through the rental
increases resulting from our capex programme as well as some further improvements in the recovery of service
charge costs.
In the six month period to 30 September 2015 we have been able to maintain the annualised gross rent roll of the 33
business parks that were owned at the start of the period at EUR50.1 million (31 March 2015: EUR50.0 million) despite the
fact that we saw 90,470 sqm of move-outs from these assets in the period. We had anticipated these move-outs well
in advance and it was mainly through 70,201 sqm of new lettings in the period at a much higher rate than the exiting
tenants that allowed us to record an annualised rent roll increase. Recovery of service charge costs continues to be
well ahead of our occupancy rates and significantly better than is typically achieved in our asset class. Both the sales
and marketing and the service charge reconciliation platforms that we have developed over the last five years
continue to perform very effectively and are significant assets to Sirius.
FFO** increased to EUR9.9 million (2014: EUR6.2 million) and FFO per share was 1.41c (2014: 1.2c) despite only seeing a
small contribution from the acquisitions and refinancing in the period, for which the EUR50m equity was raised in June
15. Adjusted earnings per share ("EPS")* was 1.25c for the six months ended 30 September 2015 (2014: 0.93c).
* Excludes property revaluation, related deferred tax, non-controlling interests, profits on disposals, change in fair value
of derivative financial instruments and non-recurring items.
** See Note 22 of Notes to the Financial Statements for explanation.
Net Asset Value
The portfolio, excluding acquisitions^ completed in the period, was independently valued on a like-for-like basis at
EUR581.4 million by Cushman & Wakefield LLP (31 March 2015: EUR550.0 million) which converts to a book value of
EUR576.3 million after Directors' discretionary impairments of non-core asset valuations and the provision for tenant
incentives. The total portfolio, including acquisitions^ completed in the period, was valued at EUR615.2 million with a
book value of EUR610.1 million.
The like-for-like valuations have increased by EUR31.4 million over the six month period, continuing to demonstrate the
long-term capital return potential of the Sirius portfolio. We have seen approximately 50bps of yield compression in the period
along with rental income improvements despite higher than usual move-outs. We continue to see returns from both an
income and valuation perspective through the investment into our capex investment programme and from purchasing
assets at discounted prices. We still have not seen the full benefit of our improved service charge recovery rate
reflected in our valuations and we believe that there remains further yield compression to come in order to align us
with where we are seeing our asset class trading at in the market.
The portfolio as at 30 September 2015 comprises 36 assets and has a book value of EUR610.1 million which can be
reconciled to the Cushman & Wakefield LLP valuation as follows:
Valuation Reconciliation to Book Value 30-Sep-15 31-Mar-15
EUR000 EUR000
Investment properties at market value 615,240 550,030
Adjustment in respect of lease incentives -2,020 -2,004
Discretionary impairment of non-core asset valuations -3,100 -2,400
Balance as at period end 610,120 545,626
The current book valuation of the core portfolio is EUR576.6 million which represents an average gross yield of 8.6%
(31 March 2015: 8.9%) and a net yield^^ of 7.7% (31 March 2015: 8.2%) which highlights the 50bps of yield compression
we have seen in the period. The average capital value per sqm is EUR564.3 (31 March 2015: EUR547.1) which remains
significantly below replacement cost. The valuation metrics of our portfolio split between the core portfolio and non-
core portfolio can be seen in the following table:
Valuation Rent Roll NOI Gross Cap Value Occupancy Vacant
EURm EURm EURm Yield EUR/psm Sqm
Core Assets 576.6 49.6 44.6 8.6% 564.3 84% 154k
Non-Core Assets 33.5 3.8 2.0 11.3% 147.5 42% 124k
Other -1.0
Total 610.1 53.4 45.6 8.7% 488.5 77% 278k
The net effect of valuation improvement on Adjusted NAV is reconciled as follows:
Six months ended Six months ended
30-Sep-15 30-Sep-14
Valuation uplift from existing portfolio 31.4 15.9
Valuation uplift from acquisitions bought at a discount 2.4 0
Less Capex invested in the period -6.1 -4.7
Less write-downs/add write-backs -0.7 0.3
Movement in adjustment for lease incentives 0 0.1
Net effect of valuation uplift in Adjusted NAV 27.0 11.6
The Adjusted NAV per share, which excludes the provisions for deferred tax and derivative financial
instruments, was 50.13c as at 30 September 2015, an increase of 5.5% over the 47.51c Adjusted NAV per share at
31 March 2015. Total Shareholder Return (based on Adjusted NAV), including the 0.84c per share final dividend paid
in July, was 7.3% for this six month period. The NAV per share and Adjusted NAV per share reflect the EUR7.6 million
early termination fees on the Macquarie loans, for which the income statement benefit will only be felt in
future periods. This early termination charge reduced the NAV per share and Adjusted NAV per share by 1.0c.
^ Acquisitions being Ludwigsburg, Weilimdorf & Heidenheim
^^ Net yield is rental income less service charge irrecoverable costs and landlord maintenance divided by valuation
Dividend
The Company's dividend policy is to pay shareholders 65% of FFO, with the dividend paid semi-annually. The
Company will continue to offer shareholders the ability to receive dividends in scrip rather than cash for which there
was a 35% scrip take-up on the Final Dividend declared in connection with the year ended 31 March 2015.
I am pleased to confirm that the Board has declared an interim dividend of 0.92c per share for the six month period
ended 30 September 2015. A detailed dividend announcement including the dates of the dividend will be made in due course.
The scrip dividend circular will be distributed to shareholders following the aforementioned announcement.
Operations
Demand for both flexible and conventional workspace continues to be strong from the Company's core German SME
customers with new lettings of 70,201 sqm at an average rate of EUR5.10 per sqm being achieved during the period.
Move-outs as expected were much higher than usual, at 90,470 sqm, however the average rate at which this space
was let was only EUR3.78 per sqm. We have commenced a programme to invest and improve the major spaces vacated
by tenants in the period in order to re-let these at higher rates. We believe that this will have a positive impact on our
rent roll and valuations over the coming years.
As previously communicated, the Company has made significant progress towards its goal to transform approximately
100,000 sqm of previously unlettable or under-rented space into a combination of conventional workspace and Sirius'
high-quality Smartspace products. The investment planned for this initiative was approximately EUR10 million with an
additional rental income of around EUR4 million per annum expected to be generated as a result. Additionally the letting
up of this space is expected to have a positive impact on the recovery of service charge costs as well as significantly
improve valuations as such space has no or very low value in our books prior to this investment. As at 30 September
2015 we had completed the transformation of 48,160 sqm of the approximately 100,000 sqm identified for investment
and investing EUR4.26 million into this space has generated EUR2.3 million per annum of additional rent roll so far, already a
54% return on investment at only 65% occupancy. In addition to this a further 28,765 sqm was in the process of being
transformed and the final 16,915 sqm was waiting to be approved. More detail on the programme is provided in the
following table:
Capital Investment Programme Progress Area Investment Rental Increase
EUR Occupancy Rate
Sqm Budget Actual Budget Achieved Budget Achieved Budget Achieved
to Date to Date to Date
Completed 48,160 5,561,900 4,258,769 2,489,645 2,245,798 81% 65% 5.32 EUR 5.96 EUR
In Progress 28,765 3,955,200 623,963 1,385,426 21,986 80% 2% 5.01 EUR 4.01 EUR
To be Commenced Next Financial Year 16,915 3,056,800 62,430 841,351 0 80% 0% 5.18 EUR - EUR
Total 93,840 12,573,900 4,945,161 4,716,422 2,267,784 81% 34% 5.20 EUR 5.93 EUR
The results achieved to date from our asset management activities on the four acquisitions completed at the end of the
last financial year have been encouraging. Since acquiring these sites we have increased their annualised rental
income by EUR311,451 on the back of an investment of EUR405,000 into their vacant space. This represents an increase
in rental income of 6.3% in approximately eight months of ownership. There remains significant potential
to improve this even further and our plan is to invest an additional EUR1.6 million into these assets over the next
18 months with the aim of improving the annualised rental income by EUR0.8 million. This investment is additional to the
capex investment programme detailed above. The table below compares the rental income of the acquisition sites
between acquisition and 30 September 2015:
Sep-15 Acquisition Improvement
Rental Income Rental Income Rental Income (%)
Mahlsdorf 1,822,735 1,786,063 36,672 2%
Potsdam 2,500,904 2,346,622 154,282 7%
Bonn 662,153 530,601 131,552 25%
Aachen I 1,865,745 1,751,112 114,633 7%
Total 6,851,537 6,414,398 437,139 7%
We were delighted to complete our latest acquisitions of five assets around the Stuttgart and Cologne areas in
September and October 2015, including our second site in Aachen. These are areas where we have a significant
presence already and are confident that our approach and products work effectively. As such we have already started
the process of investing into these sites and we believe that over the next three years we can increase rents at
these business parks by EUR0.8 million with a capital investment of EUR2.0 million on 72% of the vacant space. This
will also be additional to the capex investment programme detailed above.
The most significant element of our capex investment initiatives is the transformation of the difficult space into our
Smartspace products. As at 30 September 2015 74,235 sqm or 6.7^% of the total lettable space of the portfolio had
been converted into Smartspace. We would expect this to increase to closer to 8% after the completion of the capex
investment initiatives mentioned above. The rental rates we achieve on Smartspace Offices and Smartspace Storage
in our core locations are particularly encouraging and generally exceed EUR9 per sqm. The demand for both these
offerings is very pleasing and, generally 12 months after the space becomes ready to let, we are consistently seeing
these become more than 90% occupied in our core locations. When you consider that in most cases our Smartspace
products are created from space that is difficult to let conventionally and would often remain as structural void with
other operators, this is a significant part of the unique value add capability of the Sirius management platform. The
table below gives more detail on the Smartspace offerings across the whole portfolio:
Total SQM Occupied SQM Occupancy (%) Annual Rent Total Annual Rent % Rate
SMSP Office 24,806 18,369 74% 1,636,402 49% 7.42
SMSP Workbox 4,748 4,256 90% 293,250 9% 5.74
SMSP Storage 18,666 14,027 75% 844,506 25% 5.02
SMSP Flexilager 26,015 8,866 34% 561,779 17% 5.28
SMSP TOTAL 74,235 45,518 61% 3,335,937 100% 6.11
^ Excluding recent acquisition in Ludwigsburg, Weilimdorf & Heidenheim
We remain mindful of the fact that it is important to maintain the balance of our tenant mix so that our assets earn
enough of the high-yielding returns from our flexible products such as Smartspace to fuel our income growth but also
retain the solid core of anchor tenants to provide our banks with the comfort and stability that they require in order for
them to offer us the most competitive interest rates and term lengths. The table below illustrates the tenant mix across
our portfolio at the end of the reporting period:
No. of Tenants Occupied SQM Annual Rent Percentage Rate Per SQM
Top 50 Tenants 50 468,985 27,921,732 52% 4.96
SmartSpace Tenants 1,439 45,518 3,335,937 6% 6.11
Other Tenants 1,763 402,075 22,116,465 42% 4.58
Total (excl.
acquisitions) 3,252 916,578 53,374,134 100% 4.85
Finance
The refinancing of the two Macquarie facilities with the new EUR59 million facility with SEB, completed in September, has
had a significant impact on the average cost of debt and will reduce the annualised interest cost of the Group by
approximately EUR2.6 million. As at the reporting date, the Company had total borrowings of EUR261 million with a
weighted average cost of debt of 3.3% compared to EUR260 million of borrowings as at 31 March 2015 with a weighted
average cost of debt of 4.3%.
Subsequent to the period end in October 2015, the Company completed the final two acquisitions for which the June
2015 equity raise was intended and a new EUR25.4 million 5-year facility with Bayerisches Landesbank AG (BayernLB)
was drawn down against four of the five new acquisitions. A 5-year swap was taken out against this new facility which
fixes the interest rate payable at 1.66% all-in for the full term of the facility.
The Group's overall LTV temporarily reduced to 41.6% (31 March 2015: 46.8%) as at 30 September 2015, through
amortisation and valuation increases but also because the acquisitions that completed in the period were funded from
equity and the new BayernLB facility was not drawn down until post period end. The pro forma LTV including the
Bayern LB facility would be 45.7%.
These two new facilities with SEB and BayernLB with all-in fixed interest rates of 1.84% and 1.66% respectively are
indicative of the confidence that our lenders have in our asset management platform, especially in light of the fact
that the SEB financed portfolio had a WALE of only 2 years. There are further opportunities to reduce our cost of debt
further, by re-negotiating and restructuring existing facilities.
Outlook
The Company continues to experience high demand for its various offerings and is becoming one of the key providers
of mixed-use space to the German SME market. We have started to see some of the yield compression that the
market is experiencing and, whilst we anticipate this trend to continue, we will continue to focus our efforts on
delivering valuation and FFO improvements through our asset management initiatives as well as selective
acquisitions. Our aim is to create value for shareholders wherever we are in the real estate cycle by leveraging our
management platform.
One of the biggest drivers of organic growth is converting previously unlettable or under-rented space into a
combination of conventional workspace and Sirius' high-quality Smartspace products which often achieve rental rates
of up to double that of the average rate across our portfolio. There remains significant opportunity to continue this
through our initial capex investment programme, investing into the vacant space of our new acquisitions and investing
into the large spaces that have been vacated in the last six months.
We have seen significant progress in the period towards reducing the Group's cost of borrowing and further
opportunities exist within our current financing arrangements. The low cost of debt the business currently attracts, is a
key competitive advantage in the business park market, and confirms the confidence our lenders have in our
management platform.
Finally there remains further opportunities in the market to acquire suitable business parks at attractive pricing with
value add potential, to add to our existing network of 36 business parks and we would hope to continue to extend the
portfolio on a highly selective basis.
Although we have seen significant improvements to the Company's profitability year-on-year for some time now, the
Board believes there still remains much more to come. Sirius is in a good position and we look forward to completing
another successful year.
Independent review report
to Sirius Real Estate Limited
Introduction
We have been engaged by Sirius Real Estate Limited (the "Company") to review the unaudited interim condensed set of financial
statements of the Company and its subsidiaries (together the "Group") in the Interim Report for the six months ended 30 September
2015 which comprises the unaudited consolidated statement of comprehensive income, unaudited consolidated statement of
financial position, unaudited consolidated statement of changes in equity, unaudited consolidated statement of cash flow and related
explanatory notes. We have read the other information contained in the Interim Report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the unaudited interim condensed set of financial
statements.
This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The Interim Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the
Interim Report in accordance with the AIM Rules.
As disclosed in note 2(a), the annual financial statements of the Group are prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the EU. The unaudited interim condensed set of financial statements included in this
Interim Report has been prepared in accordance with the recognition and measurement requirements of IFRS as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the unaudited interim condensed set of financial statements in the
Interim 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 UK. 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 Ireland) 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 unaudited interim condensed set of
financial statements in the Interim Report for the six months ended 30 September 2015 is not prepared, in all material respects, in
accordance with the recognition and measurement requirements of IFRS as adopted by the EU and the AIM Rules.
KPMG Channel Islands Limited
Chartered Accountants
Guernsey
20 November 2015
Unaudited consolidated statement of comprehensive income
for the six months ended 30 September 2015
(Audited)
twelve
(Unaudited) (Unaudited) months
six months ended six months ended ended
30 September 30 September 31 March
2015 2014 2015
Notes EUR000 EUR000 EUR000
Rental income 4 25,869 21,533 45,394
Direct costs 5 (8,329) (7,671) (15,082)
Net rental income 17,540 13,862 30,312
Surplus on revaluation of investment properties 12 27,027 11,578 25,425
(Loss)/gain on disposal of properties (68) 1,084 1,270
Administrative expenses 5 (1,651) (1,660) (6,526)
Other operating expenses 5 (1,008) (1,251) (2,413)
Operating profit 41,840 23,613 48,068
Finance income 8 29 10 42
Finance expense 8 (13,866) (5,793) (12,704)
Change in fair value of derivative financial instruments 271 (2,567) (2,753)
Profit before tax 28,274 15,263 32,653
Taxation 9 (185) (2,615) (5,651)
Profit for the period 28,089 12,648 27,002
Profit attributable to:
Owners of the Company 28,079 12,637 26,985
Non-controlling interest 10 11 17
Profit for the period 28,089 12,648 27,002
Earnings per share
Basic comprehensive income for the period attributable to ordinary equity
holders of the Parent Company 10 3.97c 2.43c 4.84c
Diluted comprehensive income for the period attributable to ordinary equity
holders of the Parent Company 10 3.87c 2.36c 4.71c
The notes on page 13 to 22 form an integral part of this interim condensed set of financial statements.
Unaudited consolidated statement of financial position
as at 30 September 2015
(Audited)
(Unaudited) (Unaudited) 31 March
30 September 2015 30 September 2014 2015
Notes EUR000 EUR000 EUR000
Non-current assets
Investment properties 12 610,120 456,866 545,626
Plant and equipment 1,764 1,712 1,678
Goodwill 14 3,738 3,738 3,738
Total non-current assets 615,622 462,316 551,042
Current assets
Trade and other receivables 15 8,063 7,713 9,123
Prepayments 16 19,307 898 325
Derivative financial instruments 20 66 165 73
Cash and cash equivalents 17 14,114 18,006 20,137
Investment property held for sale 13 — 2,097 —
Total current assets 41,550 28,879 29,658
Total assets 657,172 491,195 580,700
Current liabilities
Trade and other payables 18 (26,584) (22,550) (25,862)
Interest-bearing loans and borrowings 19 (4,347) (2,721) (3,302)
Current tax liabilities — (113) (451)
Derivative financial instruments 20 (540) (449) (538)
Total current liabilities (31,471) (25,833) (30,153)
Non-current liabilities
Interest-bearing loans and borrowings 19 (251,915) (218,861) (251,480)
Derivative financial instruments 20 (1,350) (1,779) (1,784)
Deferred tax liabilities 9 (9,461) (6,566) (9,020)
Total non-current liabilities (262,726) (227,206) (262,284)
Total liabilities (294,197) (253,039) (292,437)
Net assets 362,975 238,156 288,263
Equity
Issued share capital 21 — — —
Other distributable reserve 431,560 349,184 384,937
Retained earnings (68,634) (111,061) (96,713)
Total equity attributable to the equity holders of the Parent Company 362,926 238,123 288,224
Non-controlling interests 49 33 39
Total equity 362,975 238,156 288,263
The notes on pages 13 to 22 form an integral part of this interim condensed set of financial statements.
The interim condensed set of financial statements was approved by the Board of Directors on 20 November 2015 and was signed
on its behalf by:
Robert Sinclair
Director
Unaudited consolidated statement of changes in equity
for the six months ended 30 September 2015
Total equity
attributable
to the equity
Issued Other holders of the
share distributable Retained Parent Non-controlling Total
capital reserve earnings Company interests equity
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
As at 31 March 2014 — 349,978 (123,698) 226,280 22 226,302
Shares issued, net of costs — (133) — (133) — (133)
Share-based payment transactions — 357 — 357 — 357
Dividends paid — (1,018) — (1,018) — (1,018)
Profit for the period — — 12,637 12,637 11 12,648
As at 30 September 2014 — 349,184 (111,061) 238,123 33 238,156
Shares issued, net of costs — 38,457 — 38,457 — 38,457
Share-based payment transactions — 149 — 149 — 149
Dividends paid — (2,853) — (2,853) — (2,853)
Profit for the period — — 14,348 14,348 6 14,354
As at 31 March 2015 — 384,937 (96,713) 288,224 39 288,263
Shares issued, net of costs — 48,423 — 48,423 — 48,423
Share-based payment transactions — 1,625 — 1,625 — 1,625
Dividends paid — (3,425) — (3,425) — (3,425)
Profit for the period — — 28,079 28,079 10 28,089
As at 30 September 2015 — 431,560 (68,634) 362,926 49 362,975
The notes on pages 13 to 22 form an integral part of this interim condensed set of financial statements.
Unaudited consolidated statement of cash flow
for the six months ended 30 September 2015
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Operating activities
Profit before tax 28,274 15,263 32,653
Loss/(gain) on sale of properties 68 (1,084) (1,270)
Adjustments for:
Share-based payments — 357 506
Surplus on revaluation of investment properties (27,027) (11,578) (25,425)
Change in fair value of derivative financial instruments (271) 2,567 2,753
(Increase)/Depreciation 293 510 893
Finance income (29) (10) (42)
Finance expense 6,271 5,793 12,704
Exit fees/Prepayment penalties - Refinancing 5,929 — —
Cash flows from operations before changes in working capital 13,508 11,818 22,772
Changes in working capital
(Increase)/Decrease in trade and other receivables (707) 4,054 1,592
Increase in trade and other payables 721 1,010 5,601
Taxation paid (42) (261) (552)
Cash flows from operating activities 13,480 16,621 29,413
Investing activities
Purchase of Investment Properties (31,365) — (70,975)
Prepayments on acquisition of shares (see note 24) (18,114) — —
Development expenditure (4,363) (4,200) (8,433)
Purchase of plant and equipment (380) (388) (736)
Net proceeds on disposal of properties (68) 2,119 4,403
Interest received 29 10 42
Cash flows used in investing activities (54,261) (2,459) (75,699)
Financing activities
Issue of shares 48,899 (133) 38,324
Dividends paid (3,425) (1,018) (3,871)
Proceeds from loans 59,000 — 36,000
Repayment of loans (58,324) (3,753) (6,717)
Exit fees/Prepayment penalties - Refinancing (5,929) — —
Finance charges paid (5,463) (4,999) (11,060)
Cash flows from financing activities 34,758 (9,903) 52,676
Decrease/(Increase) in cash and cash equivalents (6,023) 4,259 6,390
Cash and cash equivalents at the beginning of the period 20,137 13,747 13,747
Cash and cash equivalents at the end of the period 14,114 18,006 20,137
The notes on pages 13 to 22 form an integral part of this interim condensed set of financial statements.
Notes forming part of the financial statements
for the six months ended 30 September 2015
1. General information
Sirius Real Estate Limited (the "Company") is a company incorporated in Guernsey and resident in the United Kingdom, whose
shares are publicly traded on the Alternative Investment Market (AIM) of the London Stock Exchange (primary listing) and the
Alternative Exchange (AltX) of the Johannesburg Stock Exchange (secondary listing).
The unaudited interim condensed set of consolidated financial statements of Sirius Real Estate Limited comprises that of the
Company and its subsidiaries (together referred to as the "Group").
The principal activity of the Group is investment in and development of commercial property to provide conventional and flexible
workspace in Germany.
The audited consolidated financial statements of the Group as at and for the year ended 31 March 2015 are available upon request
from the Company's registered office at PO Box 119, Martello Court, Admiral Park, St. Peter Port, Guernsey GY1 3HB, Channel
Islands or at www.sirius-real-estate.com.
2. Significant accounting policies
(a) Basis of preparation
The unaudited interim condensed set of consolidated financial statements was prepared on a historical cost basis, except for
investment properties 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 audited consolidated financial statements of the Group for the year ended 31 March 2015 have been prepared in accordance
with International Financial Reporting Standards ("IFRS") as adopted by the EU ("Adopted IFRSs") and The Companies (Guernsey)
Law, 2008. The unaudited interim set of consolidated financial statements included in this Interim Report has been prepared in
accordance with the recognition and measurement requirements of IFRSs as adopted by the EU. The interim set of financial
statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the
Company's audited consolidated financial statements for the year ended 31 March 2015. They do not include all of the information
required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of
the Group as at and for the year ended 31 March 2015. Having reviewed the Group's current trading and forecasts, together with
sensitivities, mitigating factors and the available facilities, the Board has reasonable expectations that the Group has adequate
resources to continue in operational existence for the foreseeable future. Accordingly, the Board continues to adopt the going
concern basis in preparing these financial statements.
(b) Basis of consolidation
The unaudited interim condensed set of consolidated financial statements comprises the financial statements of the Group as at
30 September 2015. The financial statements of the Company's subsidiaries are prepared for the same reporting period as the
Company, using consistent accounting policies.
All intra-group balances and transactions and any unrealised income and expenses and profits and losses arising from intra-group
transactions are eliminated in preparing the consolidated financial statements.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to
be consolidated until the date that such control ceases.
Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately
in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position,
separately from the Parent Company shareholders' equity.
(c) Significant accounting policies
The accounting policies applied by the Group in this unaudited interim condensed set of consolidated financial statements are the
same as those applied by the Group in its audited consolidated financial statements as at and for the year ended 31 March 2015.
3. Operating segments
Segment information is presented in respect of the Group's operating segments. The operating segments are based on the Group's
management and internal reporting structure. Segment results and assets include items directly attributable to a segment as well as
those that can be allocated to a segment on a reasonable basis.
Management considers that there is only one geographical segment, which is Germany, and one business segment, which is
investment in commercial property.
4. Revenue
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Rental and other income from investment properties 25,869 21,533 45,394
5. Operating profit
The following items have been charged/(credited) in arriving at operating profit:
Direct costs
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Service charge income (15,962) (16,344) (33,995)
Property and overhead costs 24,291 24,015 49,077
Irrecoverable property costs and overheads 8,329 7,671 15,082
Administrative expenses
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Audit fees 288 170 409
Legal and professional fees 740 706 1,379
Other administration costs 681 558 907
Non-recurring items (58) 226 3,831
Administrative expenses 1,651 1,660 6,526
Other operating expenses
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Directors' fees 85 86 171
Bank fees 62 49 88
Depreciation 293 510 893
Marketing and other expenses 568 606 1,261
Other operating expenses 1,008 1,251 2,413
6. Employee costs and numbers
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Wages and salaries 4,789 4,347 11,450
Social security costs 943 816 2,159
Other employment costs 29 18 49
5,761 5,181 13,658
All employees are employed directly by Sirius Facilities GmbH, Sirius Facilities (UK) Limited, Curris Facilities & Utilities
Management GmbH, SFG Nova GmbH and Sirius Corporate Services B.V., all Group subsidiary companies. The average number
of persons employed by the Group in the reporting period was 188 (31 March 2015: 169; 30 September 2014: 165), expressed in
full-time equivalents.
The Board of Directors consists of four Non-executive Directors and two Executive Directors.
7. Equity-settled share-based payments
The Group has a long-term incentive scheme for the benefit of certain key management personnel. As a result, 3,471,210 shares
were issued to the Company's management pursuant to the scheme during the reporting period (31 March 2015: 666,668). An
expense of EUR86,246 was recognised in the consolidated statement of comprehensive income to 30 September 2015 (31 March
2015: EUR261,000), the remaining expense having been accrued in the prior period.
During the period, a further 38,709 shares were issued to the Company's management through its share matching scheme and
shares taken in lieu of bonus (31 March 2015: 870,279). For the issued shares that were not expensed in prior years, income of
EUR63,538 was recognised in the consolidated statement of comprehensive income to 30 September 2015 (31 March 2015: expense
of EUR109,000).
8. Finance income and expense
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Bank interest income 29 10 42
Finance income 29 10 42
Bank interest expense (5,462) (4,999) (11,060)
Amortisation of capitalised finance costs (809) (794) (1,644)
Refinancing costs (7,595) — —
Finance expense (13,866) (5,793) (12,704)
Net finance expense (13,837) (5,783) (12,662)
The refinancing costs for the six months ended 30 September 2015 relate to the exit costs associated with the refinancing of the
Macquarie loan facilities with the new EUR59 million SEB loan facility.
9. Taxation
Consolidated statement of comprehensive income
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Current income tax
Current income tax credit/(charge) 256 (249) (564)
Adjustments in respect of prior period — — (267)
256 (249) (831)
Deferred tax
Relating to origination and reversal of temporary differences (441) (2,366) (4,820)
Income tax charge reported in the statement of comprehensive income (185) (2,615) (5,651)
Deferred income tax liability
(Audited)
twelve
months
(Unaudited) (Unaudited) ended
six months ended six months ended 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Opening balance 9,020 4,200 4,200
Taxes on the revaluation of investment properties and derivative financial
instruments[1] 441 2,366 4,820
Balance as at period end 9,461 6,566 9,020
1 [Movement refers to the revaluation of investment properties to fair value, the recognition of derivatives and adjustments for lease incentives (e.g. rent free periods)]
Management does not recognise deferred tax assets in respect of revaluation losses as they may not be used to offset taxable
profits elsewhere in the Group.
10. Earnings per share
The calculations of the basic, diluted, headline and adjusted earnings per share are based on the following data:
(Unaudited) (Unaudited) (Audited)
six months ended six months ended twelve months ended
30 September 2015 30 September 2014 31 March 2015
EUR000 EUR000 EUR000
Earnings
Basic earnings 28,079 12,637 26,985
Diluted earnings 28,204 12,762 27,235
Headline earnings 1,561 2,341 5,110
Diluted headline earnings 1,686 2,466 5,360
Adjusted
Basic earnings after tax 28,079 12,637 26,985
Deduct revaluation surplus, net of related tax (26,586) (9,212) (20,605)
(Deduct gain)/Add back loss on sale of properties 68 (1,084) (1,270)
Headline earnings after tax 1,561 2,341 5,110
Add back change in fair value of derivative financial instruments (271) 2,567 2,753
Add back non-recurring items 7,537 (49) 3,831
Adjusted earnings after tax 8,827 4,859 11,694
Number of shares
Weighted average number of ordinary shares for the purpose
of basic and headline earnings per share 707,075,634 520,244,292 557,221,586
Weighted average number of ordinary shares for the purpose
of diluted earnings and diluted headline earnings per share 727,908,968 541,077,625 578,054,919
Weighted average number of ordinary shares for the purpose
of adjusted earnings per share 707,075,634 520,244,292 557,221,586
Basic earnings per share 3.97c 2.43c 4.84c
Diluted earnings per share 3.87c 2.36c 4.71c
Headline earnings per share 0.22c 0.45c 0.92c
Diluted headline earnings per share 0.23c 0.46c 0.93c
Adjusted earnings per share 1.25c 0.93c 2.10c
The number of shares has been adjusted for the 1,471,875 shares held by the Company as Treasury Shares.
The non-recurring items consist mainly of the EUR7.6 million early termination fees for the repayment of the Macquarie facilities.
The Directors have chosen to disclose adjusted earnings per share in order to provide a better indication of the Group's underlying
business performance; accordingly, it excludes the effect of non-recurring costs, deferred tax and revaluation surpluses and deficits
on investment properties and derivative instruments.
11. Net assets per share
(Unaudited) (Unaudited) (Audited)
30 September 2015 30 September 2014 31 March 2015
EUR000 EUR000 EUR000
Net assets
Net assets for the purpose of assets per share
(assets attributable to the equity holders of the Parent) 362,926 238,123 288,224
Deferred tax arising on revaluation of properties 9,461 6,566 9,020
Derivative financial instruments 1,824 2,063 2,249
Adjusted net assets attributable to equity holders of the
Parent 374,211 246,752 299,493
Number of shares
Number of ordinary shares for the purpose of net assets per share 746,410,666 522,075,395 630,338,749
Net assets per share 48.62c 45.61c 45.73c
Adjusted net assets per share 50.13c 47.26c 47.51c
The number of shares has been adjusted for the 1,471,875 shares held by the Company as Treasury Shares.
12. Investment properties
A 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) (Unaudited) (Audited)
30 September 2015 30 September 2014 31 March 2015
EUR000 EUR000 EUR000
Investment properties at market value 615,240 463,576 550,030
Adjustment in respect of lease incentives (2,020) (1,959) (2,004)
Directors' discretionary impairment of non-core asset valuations (3,100) (2,654) (2,400)
Reclassified as investment properties held for sale — (2,097) —
Balance as at period end 610,120 456,866 545,626
The fair value (market value) of the Group's investment properties at 30 September 2015 has been arrived at on the basis of a
valuation carried out at that date by Cushman & Wakefield LLP (2014: Cushman & Wakefield LLP), an independent valuer.
The value of each of the properties has been assessed in accordance with RICS Valuation Standards on the basis of market value.
Market value was primarily derived using a ten year discounted cash flow model supported by comparable evidence. The
discounted cash flow calculation is a valuation of rental income considering non-recoverable costs and applying a discount rate for
the current income risk over a ten year period. After ten years a determining residual value (exit scenario) is calculated. A cap rate
is applied to the more uncertain future income, discounted to a present value. The weighted average lease expiry remaining across
the whole portfolio as at 30 September 2015 was 2.5 years.
As a result of the level of judgement 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 movement on the valuation of the investment properties of market value as set out in the valuer's report is as follows:
(Audited)
(Unaudited) (Unaudited) 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Total investment properties at market value as per valuer's report as at 1 April 550,030 448,653 448,653
Additions 31,365 — 70,975
Subsequent expenditure 6,102 4,699 8,591
Adjustment in respect of lease incentives 16 (57) 102
Disposals — (1,035) (3,132)
Surplus on revaluation above capex 27,027 11,578 25,425
Reclassified as other fixed assets — (33) (111)
Changes in Directors' discretionary impairment of non-core asset valuations 700 (229) (473)
Total investment properties at market value as per valuer's report as at period
end 615,240 463,576 550,030
13. Investment properties held for sale
(Audited)
(Unaudited) (Unaudited) 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Berlin Gartenfeldstr. land — 1,800 —
Cottbus site — 297 —
Balance as at period end — 2,097 —
14. Goodwill
(Audited)
(Unaudited) (Unaudited) 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Opening balance 3,738 3,738 3,738
Additions — — —
Impairment — — —
Closing balance 3,738 3,738 3,738
On 30 January 2012 a transaction was completed to internalise the Asset Management function and, as a result of the
consideration given exceeding the net assets acquired, goodwill of EUR3,738,000 was recognised. The impairment review
methodology for goodwill is unchanged from that described in the 2015 Annual Report and Group Financial Statements. Current
business plans indicate that the balance is unimpaired.
15. Trade and other receivables
(Audited)
(Unaudited) (Unaudited) 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Trade receivables 1,857 1,240 3,591
Other receivables 6,206 6,473 5,532
Balance as at period end 8,063 7,713 9,123
16. Prepayments
(Audited)
(Unaudited) (Unaudited) 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Balance as at period end 19,307 898 325
The prepayments to 30 September 2015 include prepayments of EUR18,144,177 made for the purchase of a property in Cologne
through the purchase of shares in the company Verwaltungsgesellschaft Gewerbepark Bilderstöckchen GmbH, Rüsselsheim, in the
amount of EUR18,144,177. The shares in this company were purchased with effect 1 October 2015 (see note 24 for further details).
17. Cash and cash equivalents
(Audited)
(Unaudited) (Unaudited) 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Cash at banks and in hand 14,114 18,006 20,137
Balance as at period end 14,114 18,006 20,137
The fair value of cash is EUR14,114,083 (31 March 2015: EUR20,137,487).
As at 30 September 2015 EUR8,727,735 (31 March 2015: EUR10,073,021) of cash is held in blocked accounts. Of this EUR4,357,323 (31
March 2015: EUR3,880,386) relates to deposits received from tenants. An amount of EUR15,561 (31 March 2015: EUR15,561) is cash held
in escrow as requested by a supplier and EUR153,777 (31 March 2015: EUR116,307) is held in restricted accounts for office rent
deposits. An amount of EUR3,201,074 (31 March 2015: EUR6,060,767) relates to amounts reserved for future bank loan interest and
amortisation payments, pursuant to certain of the Group's banking facilities, and an amount of EUR1,000,000 (31 March 2015: EURnil)
relates to amounts reserved for future capital expenditure.
18. Trade and other payables
(Audited)
(Unaudited) (Unaudited) 31 March
30 September 2015 30 September 2014 2015
EUR000 EUR000 EUR000
Trade payables 7,359 7,071 5,001
Accrued expenses 8,236 6,314 9,712
Accrued interest 1,614 1,811 692
Other payables 9,375 7,354 10,457
Balance as at period end 26,584 22,550 25,862
19. Interest-bearing loans and borrowings
(Unaudited) (Unaudited) (Audited)
Effective 30 September 30 September 31 March
interest rate 2015 2014 2015
per cent Maturity EUR000 EUR000 EUR000
Current
SEB AG
– fixed rate facility 1.84 1 September 2022 1,180 — —
Berlin-Hannoversche Hypothekenbank AG/
Deutsche Pfandbriefbank AG
– capped floating rate facility Capped floating[1] 31 March 2019 1,150 1,150 1,150
– hedged floating rate facility Hedged[1] 31 March 2019 1,150 1,150 1,150
Berlin-Hannoversche Hypothekenbank AG
– fixed rate facility 2.85 31 December 2019 720 — 720
Macquarie Bank Limited
– hedged floating rate facility Hedged[2] 17 January 2017 — 543 555
– floating rate facility Floating[2] 17 January 2017 — 169 158
– floating rate facility Floating[3] 17 January 2017 — 325 325
K-Bonds I
– fixed rate facility 6.00 31 July 2020 1,000 1,000 1,000
Capitalised finance charges on all loans (853) (1,616) (1,756)
4,347 2,721 3,302
Non-current
SEB AG
– fixed rate facility 1.84 1 September 2022 57,820 — —
Berlin-Hannoversche Hypothekenbank AG/
Deutsche Pfandbriefbank AG
– capped floating rate facility Capped floating[1] 31 March 2019 54,625 55,775 55,200
– hedged floating rate facility Hedged[1] 31 March 2019 54,625 55,775 55,200
Berlin-Hannoversche Hypothekenbank AG
– fixed rate facility 2.85 31 December 2019 34,740 — 35,100
Macquarie Bank Limited
– hedged floating rate facility Hedged[2] 17 January 2017 — 19,457 19,445
– floating rate facility Floating[2] 17 January 2017 — 6,075 5,538
– floating rate facility Floating[3] 17 January 2017 — 30,880 29,793
K-Bonds I
– fixed rate facility 4.00 31 July 2023 45,000 45,000 45,000
– fixed rate facility 6.00 31 July 2020 4,000 5,000 5,000
Convertible fixed rate facility 5.00 21 March 2018 5,000 5,000 5,000
Capitalised finance charges on all loans (3,895) (4,101) (3,796)
251,915 218,861 251,480
Total 256,262 221,582 254,782
1 This facility is half floating charged interest at 300 bps plus EURIBOR with a cap at 4.50 per cent and half hedged with a SWAP
charged at a rate of 4.065 per cent.
2 EUR20.0 million of this facility was charged interest at 6.0 per cent plus 0.629 per cent by means of an interest rate swap.
The remainder of the facility was charged interest at 6.0 per cent plus EURIBOR. This facility was paid in full through refinancing
with the SEB loan on 15 September 2015.
3 This facility was charged interest at 6.0 per cent plus EURIBOR. This facility was paid in full through refinancing with the SEB loan
on 15 September 2015.
The Group has pledged 27 (31 March 2015: 29) investment properties to secure related interest-bearing debt facilities granted to
the Group. The 27 (31 March 2015: 29) properties had a combined valuation of EUR531,779,000 as at 30 September 2015 (31 March
2015: EUR527,075,000).
SEB AG
On 2 September 2015, the Group agreed to a facility agreement with SEB AG for EUR59 million to refinance the two existing
Macquarie facilities. The loan terminates on 1 September 2022 and is charged a fixed interest rate of 1.84% for the full length of the
facility. The loan requires annual amortisation payments of 2% of the initial loan amount, with the remainder due on 1 September
2022. This facility is secured over 12 of the 14 property assets previously financed through the Macquarie facilities, thereby two
non-core assets were unencumbered in the refinancing process. The facility is subject to various covenants with which the Group
has complied.
Berlin-Hannoversche Hypothekenbank AG
On 15 December 2014, the Group agreed to a facility agreement with Berlin-Hannoversche Hypothekenbank AG for EUR36 million.
The loan terminates on 31 December 2019. Amortisation is 2% p.a. for the first two years, 2.4% for the third year and 2.8%
thereafter, with the remainder due at the end of the fifth year. The facility is charged a fixed interest rate of 2.85% for the full length
of the loan. This facility is secured over three property assets and is subject to various covenants with which the Group has
complied.
Berlin-Hannoversche Hypothekenbank AG/Deutsche Pfandbriefbank AG
On 31 March 2014, the Company entered into a facility agreement with Berlin-Hannoversche Hypothekenbank AG and Deutsche
Pfandbriefbank AG for EUR115,000,000. The loan terminates on 31 March 2019. Amortisation was set at 2 per cent p.a. for the first
two years, 2.5 per cent for the third year and 3 per cent thereafter, with the remainder due at the end of the fifth year. Half of the
facility is charged interest at 3 per cent plus three months' EURIBOR and is capped at 4.5 per cent; the other half has been hedged
with a SWAP at an all-in interest rate of 4.065 per cent until 31 March 2019. This facility is secured over nine property assets and is
subject to various covenants with which the Group has complied.
Macquarie Bank Limited
On 17 January 2013, the Company entered into a facility agreement with Macquarie Bank Limited for EUR28,500,000. The loan was to
terminate on 17 January 2017. Amortisation was set at 2.5 per cent p.a. for the first three years, with the remainder due at the end
of the fourth year. The facility was subject to a cash sweep each quarter whereby Macquarie swept the rent collection accounts of
the facilities' borrowers applying any excess towards the loan balance with immediate effect and without penalty. EUR20.0 million of
the facility was hedged at a rate of 6.629 per cent until 23 July 2016 by way of an interest rate swap. The remainder of the facility
was charged interest at 6 per cent plus three months' EURIBOR. This facility was secured over five property assets and was
subject to various covenants with which the Group complied. The facility was paid back in full through refinancing with the SEB loan
on 15 September 2015.
On 13 December 2013, the Company entered into a second facility agreement with Macquarie Bank Limited for EUR32,500,000. The
loan was to terminate on 17 January 2017. Amortisation was set at 1 per cent p.a. for the first three years, subject to meeting an
agreed business plan, with the remainder due at the end of the fourth year. The business plan was tested quarterly in arrears and,
if the projected plan numbers were not achieved, Macquarie had the option to sweep the facilities' borrowers' rent collection
accounts applying any excess towards the loan balance with immediate effect and without penalty. The facility was charged interest
at 6 per cent plus three months' EURIBOR. This facility was secured over nine property assets and was subject to various
covenants with which the Group complied. The facility was paid back in full through refinancing with the SEB loan on 15 September
2015.
K-Bonds
On 1 August 2013, the Company entered into a facility agreement with K-Bonds for EUR52,000,000. The loan consists of a senior
tranche of EUR45,000,000 and a junior tranche of EUR7,000,000. The senior tranche has a fixed interest rate of 4 per cent p.a. and is due
in one sum on 31 July 2023. The junior tranche has a fixed interest rate of 6 per cent and terminates on 31 July 2020. The junior
tranche is amortised at EUR1,000,000 p.a. over a seven year period. This facility is secured over three properties and is subject to
various covenants with which the Group has complied.
Convertible shareholder loan
On 22 March 2013, the Company issued EUR5 million convertible Loan Notes due in 2018 (the "Loan Notes"). The entire issue of EUR5
million was taken up by the Karoo Investment Fund S.C.A. SICAV-SIF and Karoo Investment Fund II S.C.A. SICAV-SIF, the largest
shareholder in Sirius. The Loan Notes were issued at par and carry a coupon rate of 5 per cent p.a. The Loan Notes are convertible
into ordinary shares of Sirius at an original conversion price of EUR0.24 and can now be converted at any time. The conversion price is
subject to dividend protection and when considering the dividends that the Group has paid to date, the current conversion price is
EUR0.224 as at 30 September 2015. The majority of the proceeds from the issue of the Loan Notes were used to reduce debt levels,
thereby facilitating the Group's refinancing completed earlier in 2014.
20. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts and fair values of all the Group's financial instruments that are
carried in the financial statements:
(Unaudited) (Unaudited) (Audited)
30 September 2015 30 September 2014 31 March 2015
Carrying Fair Carrying Fair Carrying Fair
amount value amount value amount value
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Financial assets
Cash 14,114 14,114 18,006 18,006 20,137 20,137
Trade receivables 1,857 1,857 1,240 1,240 3,591 3,591
Derivative financial instruments 66 66 165 165 73 73
Financial liabilities
Trade payables 7,359 7,359 7,071 7,071 5,001 5,001
Derivative financial instruments 1,890 1,890 2,228 2,228 2,322 2,322
Interest-bearing loans and borrowings:
Floating rate borrowings — — 37,449 37,449 35,814 35,814
Floating rate borrowings – hedged[1] 55,775 55,775 76,925 76,925 76,350 76,350
Floating rate borrowings – capped 55,775 55,775 56,925 56,925 56,350 56,350
Fixed rate borrowings 149,460 149,969 56,000 56,116 91,820 91,094
1 The Group holds interest rate swap contracts and cap contracts designed to manage the interest rate and liquidity risk of expected
cash flows of its borrowing with the variable rate facilities with Macquarie Bank Limited and with Berlin-Hannoversche Hypothekenbank
AG/Deutsche Pfandbriefbank AG. The swap contract with Macquarie Bank Limited was terminated on 15 September 2015 when the facility that
it hedged was repaid in full. The swap contracts as well as the cap contracts hedging the facility with Berlin-Hannoversche Hypothekenbank
AG/Deutsche Pfandbriefbank AG mature on 31 March 2019.
21. Issued share capital
Number of Share capital
shares EUR
Authorised
Ordinary shares of no par value Unlimited —
As at 30 September 2015 Unlimited —
Number of Share capital
shares EUR
Issued and fully paid
Ordinary shares of no par value
Issued ordinary shares 327,800,000 —
Shares brought back and held in treasury (25,576,824) —
Issued Treasury Shares during the period 15,355,000 —
As at 31 March 2013 317,578,176 —
Issued ordinary shares 197,619,038 —
Issued Treasury Shares during the period 3,703,093 —
As at 31 March 2014 518,900,307 —
Issued ordinary shares 109,901,495 —
Issued Treasury Shares during the period 1,536,947 —
As at 31 March 2015 630,338,749 —
New shares issued 112,562,008 —
Issued Treasury Shares during the period 3,509,909 —
As at 30 September 2015 746,410,666 —
In May 2015, the Company announced a dividend of 0.84c per share with a record date of 12 June 2015 and payable on 10 July
2015. The dividend was offered to shareholders in cash or scrip form. Accordingly, on 10 July 2015, the Company allotted and
issued 758,036 ordinary shares at a reference price of 48.685 cents (Euro) to UK shareholders who elected to receive ordinary
shares under the Scrip Dividend Programme, and 3,108,320 ordinary shares at a reference price of 647.56225 cents (Rand) to
South African shareholders who elected to receive ordinary shares under the Scrip Dividend Programme as an alternative to the
dividend. The new shares rank pari passu in all respects with previously existing issued shares of the Company including the right
to receive all dividends and other distributions declared after admission and the right to vote at any general meeting.
On 15 June 2015, the Company conducted a private placement equity raising through the issue of 108,695,652 ordinary shares of
no par value, representing approximately 17 per cent of Sirius Real Estate's issued ordinary share capital prior to the private
placement. These shares were issued at a price of 46 cents (Euro) per share to UK investors and 646.3 cents (Rand) to South
African investors. The private placement shares were not eligible to receive the final dividend of 0.84 Euro cents declared in respect
of the twelve months ending 31 March 2015, nor to participate in the scrip dividend alternative in relation to that dividend. The
private placement shares rank pari passu in all respects with existing issued shares of the Company including the right to receive
all dividends and other distributions declared after admission.
The Company holds 1,471,875 of its own shares, which continue to be held in Treasury. No share buybacks were made in the
period.
22. Dividends
In May 2015, the Company announced a dividend of 0.84c per share with a record date of 12 June 2015 and payable on 10 July
2015. On the record date, 635,320,533 shares were in issue, of which 1,471,875 were held in Treasury and 633,848,658 were
entitled to participate in the dividend. Holders of 223,849,004 shares elected to receive the dividend in ordinary shares under the
Scrip Dividend Programme representing a dividend of EUR1,898,693, while holders of 409,999,654 shares opted for a cash dividend
with a value of EUR3,425,636. The total dividend was EUR5,324,329.The dividend paid per the Statement of Changes in Equity includes
the cash dividend, the scrip dividend and the value of the scrip shares issued.
The Board continues to support the dividend policy to pay out 65 per cent of FFO comprising recurring earnings after tax, adjusted
for depreciation, amortisation of debt arrangement fees and other non-cash items.
In line with this policy, the Board has proposed to pay a dividend for the period ended 30 September 2015 of 0.92c per share, again
providing the option of receiving scrip in lieu of the dividend. The dividend per share was calculated as follows:
30 September 2015 30 September 2014
EUR million EUR million
Reported profit before tax 28.3 15.3
Adjustments for:
Gain on revaluation (27.0) (11.6)
(Profit)/loss of disposals — (1.1)
Non-recurring (revenue)/costs[1] 7.5 (0.1)
Change in fair value of derivatives (0.2) 2.6
Recurring profit before tax 8.6 5.1
Adjustments for:
Depreciation 0.3 0.5
Amortisation of financing fees 0.8 0.8
Current taxes receivable/(incurred) (see note 9) 0.2 (0.2)
Funds from operations 9.9 6.2
Dividend pool 6.9[2]
DPS 0.92c
1 Includes the net effect of Macquarie refinancing costs, management LTIP rewards, aborted acquisition costs and non-recurring foreign currency gains
2 Calculated as 65 per cent of FFO of 1.41c/share based on average number of shares outstanding of 707,075,634 shares
A detailed dividend announcement including the dates of the dividend will be made in due course. The scrip dividend circular will be distributed
to shareholders following the aforementioned announcement.
23. Capital and other commitments
As at 30 September 2015 the Group had contracted capital expenditure on existing properties of EUR4,870,000 (31 March 2015:
EUR4,389,000) and commitments of EUR3,392,000 (31 March 2015: EUR744,000) derived from office rental contracts. These commitments
have not yet been provided for in the balance sheet.
24. Post Balance Sheet Events
On 1 October 2015, the Group acquired 94.15% of the shares in the Company Verwaltungsgesellschaft Gewerbepark
Bilderstöckchen GmbH, Rüsselsheim, for total consideration of EUR18,144,177 (shown in Prepayments, see note 16 above). The
assets and liabilities of the acquired company will be consolidated into the Group's financial statements with effect of 1 October
2015. This company owns the property in Cologne which is one of the five assets the Company announced it would purchase with
the proceeds from the capital raised on 15 June 2015 as described in Note 21. The property is a modern freehold multi-let
Business Park totalling 13,640 sqm of net lettable area built in 2002 comprising a mixture of offices and warehouse on the ground
floor and offices on the upper floors. Additional development land of 8,155 sq m was included in the purchase and is located
adjacent to the Business Park. The property is 89.7% occupied, let to 13 tenants producing an annual income of EUR1.47 million and
having a weighted average remaining lease term of 1.9 years.
On 20 October 2015, the Group concluded a facility agreement with the Bayerische Landesbank for EUR25.4 million on four of the five
assets the Company announced it would purchase with the proceeds from the capital raised on 15 June 2015 as described in Note
21. These assets have a fair value of EUR46.2 million as at 30 September 2015. The 5-year facility terminates on 19 October 2020.
Amortisation is 2% p.a., charged semi-annually, with the remainder due in one instalment on the final maturity date. The facility is
hedged with a swap with an all-in interest rate of 1.66%.
With effect from 1 November 2015, the Group acquired the fifth property that it had announced it would purchase with the proceeds
from the capital raised as described in Note 21. This property is a mixed use business park located in Aachen totalling 9,679 sqm of
net lettable area and comprising multi-let office (26%), warehousing (74%), which was built in1993. The property is 96.7% occupied
and let to 4 tenants producing an annual income of EUR532,424 and having a weighted average remaining lease term of 2.0 years.
On 18 November 2015, the Group notarised the purchase of the "Gutenberg Park" property in Mainz. This property is a mixed use business park
comprising multi-let office and warehousing constructed in 1992/1995, totaling 25,112 sqm. The property is 82.8% occupied and let to 30 tenants
producing an annual income of EUR2.2 million and having a weighted average remaining lease term of 3.9 years. The purchase price is EUR24.0 million,
with the expected all-in costs being EUR25.6 million.
Corporate directory
Registered office
PO Box 119
Martello Court
Admiral Park
St. Peter Port
Guernsey GY1 3WR
Channel Islands
Registered number
Incorporated in Guernsey under The Companies (Guernsey) Laws, 2008, as amended, under number 46442
Company secretary and administrator
Intertrust Fund Services (Guernsey) Limited
PO Box 119
Martello Court
Admiral Park
St. Peter Port
Guernsey GY1 3HB
Channel Islands
UK solicitors
Norton Rose LLP
3 More London Riverside
London SE1 2AQ
Guernsey solicitors
Carey Olsen
PO Box 98
7 New Street
St. Peter Port
Guernsey GY1 4BZ
Channel Islands
Financial PR
Novella Communications
19 Buckingham Gate
London SW1E 6LB
JSE Sponsor
PSG Capital Proprietary Limited
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch
7600
South Africa
Nominated adviser and joint broker
Peel Hunt LLP
120 London Wall
London EC2Y 5ET
Joint Broker
Canaccord Genuity Limited
88 Wood Street
London EC2V 7QR
Property valuers
Cushman & Wakefield LLP
Rathenauplatz 1
60313 Frankfurt am Main
Germany
Independent auditors
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St. Peter Port
Guernsey GY1 1WR
Channel Islands
23 November 2015
Date: 23/11/2015 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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