Wrap Text
Financial Results For The Twelve Months Ended 31 March 2019 And Dividend Declaration
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
("Sirius", "the Group" or "the Company")
Condensed consolidated financial results* for the twelve months ended 31 March 2019
Strong Organic Rental Growth and Total Shareholder Accounting Return
Sirius Real Estate, the leading operator of branded business parks providing conventional space and flexible workspace in Germany,
today announces condensed consolidated financial results for the twelve months ended 31 March 2019.
HIGHLIGHTS
- Profit before tax increased by 61.5% to EUR144.7 million (2018: EUR89.6 million) including revaluation gains of EUR99.9 million net
of capex and adjustments in respect of lease incentives
- Strong like-for-like annualised rent roll increase of 7.1% (2018: 6.2%) - total annualised rent roll increased to EUR87.8 million
(2018: EUR79.5 million**)
- Funds from operations ("FFO") grew by 26% to EUR48.4 million (2018: EUR38.4 million)
- Like-for-like book value increase of 13.3% or EUR128.2 million (2018:11.6%) - total portfolio book value increased to
EUR1,132.5 million (2018: EUR931.2 million)
- NAV per share increased 12.6% to 71.01c (2018: 63.09c)
- EPRA NAV per share increased 16.6% to 74.82c (2018: 64.18c)
- Further progress with Asset Recycling programme - three non-core assets located in Bremen sold generating EUR25.6 million,
acquired six new assets for EUR101.2 million** and notarised two acquisitions totalling EUR15.2 million
- Established new venture with AXA Investment Managers - Real Assets ("AXA IM - Real Assets") - sale of 65% of five
subsidiary companies*** with implied property value of EUR168.0 million (30 September 2018: EUR141.1 million)
- Total shareholder accounting return based on adjusted NAV and dividends paid of 19.3% (2018: 17.0%)
- Final dividend of 1.73c per share declared giving total dividend for year of 3.36c (based on 70% of FFO payout) an increase
of 6.3% on the 3.16c total dividend for the year ended 31 March 2018 (based on 75% of FFO payout)
* referred to as preliminary consolidated financial results for the purpose of the JSE Listing Requirements
** including two assets totalling EUR36.1 million that were prepaid at 31 March 2018
*** transaction expected to complete in July 2019
Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said:
"This has been a particularly successful year for the business on many fronts. As well as generating a strong total shareholder
accounting return of 19.3% and high like-for-like annualised rent roll growth of 7.1%, we've significantly reshaped the portfolio to
focus on our seven key cities. We also agreed an exciting new venture with AXA IM - Real Assets which will enable us to consider
larger assets and portfolios of assets with a wider range of return profiles than we could previously. These achievements are testimony
to the quality of our in-house platform and the strength of the team.
Having successfully achieved the previously stated goal of increasing the company's gross assets to in excess of EUR1 billion our focus
will now shift to FFO growth. We are confident that the resilience of the varied sectors of the Germany economy within which we
operate and the strength of our business model will continue to help us achieve strong returns for our shareholders well into the future."
For further information:
Sirius Real Estate
Andrew Coombs, CEO
Alistair Marks, CFO
+49 (0) 30 285010110
Tavistock (financial PR)
Jeremy Carey
James Verstringhe
Charlotte Dale
+44 (0) 20 7920 3150
siriusrealestate@tavistock.co.uk
NOTES TO EDITORS
About Sirius Real Estate Limited
Sirius Real Estate is a property company listed on the Main Market and premium segment of the London Stock Exchange and the
Main Board of the JSE Limited. 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.
For more information, please visit: www.sirius-real-estate.com
Follow us on LinkedIn at https://www.linkedin.com/company/siriusrealestate/
Follow us on Twitter at @SiriusRE
LEI: 213800NURUF5W8QSK566
JSE Sponsor
PSG Capital
Chairman's statement
Disciplined execution
- Sirius' core objective is to deliver attractive risk-adjusted returns from industrial, warehouse and office property
investments in Germany through a mix of dividend yield and capital value appreciation across different market conditions
- The year under review saw Sirius achieve high organic rental growth and hence significant improvements in the value of
its portfolio
- Sirius continued its capital recycling programme by disposing of three assets in challenging locations whilst acquiring a
total of six and notarising two new assets providing greater scope for income and capital growth
- The establishment of a new venture with AXA IM - Real Assets in the period has created another channel for significant
future growth in the future
Introduction
It is with great pleasure that my first report as Chairman of the Company relates to a period of operational and strategic success for
the business. Prior to my appointment as Chairman in September 2018, James Peggie, Senior Independent Director, held the role
of Acting Chairman for nine months. We are most grateful for his stewardship during that interim period.
Sirius' core objective remains to deliver attractive risk-adjusted returns through a mix of dividend yield and capital value
appreciation. We continue to focus on industrial, warehouse and secondary offices throughout Germany but mainly in and around
the seven largest cities. We are achieving our returns expectations by maximising the opportunities across our portfolio which now
consists of 57 owned and managed assets throughout Germany. Key to this is the internal operating platform which remains one of
the main differentiators of Sirius from other companies that own and manage industrial business parks in Germany. The year under
review saw the Company make a number of acquisitions and disposals. The benefits of leveraging our in-house platform, as well as
active management activities associated with our highly accretive capex investment programme contributed to the Company
increasing rental and other income from investment properties to EUR84.4 million up from EUR71.8 million. In addition, the Company
posted a record 7.1% increase in like-for-like annualised rent roll and a 13.3% increase in like-for-like portfolio book value, which
combined have contributed to a total shareholder accounting return of 19.3%, the fourth consecutive year of returns in excess of 15%.
FY18/19 highlights
Strong trading performance
It is pleasing to be able to report on an excellent twelve months of trading for Sirius, during which the Company recorded a profit
before tax of EUR144.7 million, up 61.5% on the prior year whilst funds from operations ("FFO") increased by 26.0% to EUR48.4 million
despite the investment into acquisitions from the March 2018 equity raise taking longer than expected. The impact of the
acquisitions timing was more than offset by the Company's highest ever like-for-like increase in annualised rent roll.
Additionally, the Company has seen its net asset value per share increase by 12.6% to 71.01c and EPRA net asset value per share
increase by 16.6% to 74.82c mainly due to valuation gains (net of capex and adjustments in respect of lease incentives) of
EUR99.9 million. This strong performance highlights how the Company's operating platform drives organic rental and valuation growth as
well as the appeal of the Company's conventional and flexible workspace solutions within the German Mittelstand (SME) market
which continues to perform well.
Shareholder returns
Consistent outperformance of targets
The Company's stated policy is to pay out 65% of the Group's FFO to shareholders as dividends but as indicated previously, the
Board does consider temporary increases in the pay-out ratio in order to maintain the positive dividend growth that would have
been achieved had it not been for the asset recycling and equity raising activities. Accordingly, the Board has declared a final
dividend of 1.73c per share representing 70% of FFO, an increase of 8.1% on the final dividend last year (which represented 75%
of FFO). The total dividend for the year is 3.36c, an increase of 6.3% on the 3.16c total dividend for the year ended 31 March 2018.
The progression of the Company's dividend growth of 51.4% since the financial year ending 31 March 2016 can be seen in the
table below.
Financial year Pay-out ratio Dividend per share (cents) Cumulative Dividend Growth (%)
2015-2016 65% 2.22
2016-2017 65% 2.92 31.5%
2017-2018 75% 3.16 42.3%
2018-2019 70% 3.36 51.4%
The Sirius business model continues to deliver not only progressive income returns but also attractive capital growth as measured
by adjusted net asset value(1) ("adjusted NAV") per share. Combining the growth in adjusted NAV and dividends paid, the
Company has delivered an annual total shareholder accounting return in excess of 15% for each of the last four years with a return
of 19.3% recorded for the year to 31 March 2019. While dividend distributions typically contribute approximately 30% and adjusted
NAV growth 70% of total shareholder accounting returns, it is pleasing to note that the valuation movement of our investment
properties is derived predominantly from organic increases in income rather than yield movement. This focus on growing income at
property level positions the Company well for the future.
(1) Excludes the provisions for deferred tax and derivative financial instruments
Total shareholder % of return derived from % of return derived from
Financial year accounting return(1) adjusted NAV growth dividends paid
2015-2016 16.0% 76.8% 23.2%
2016-2017 15.3% 67.0% 33.0%
2017-2018 17.0% 69.1% 30.9%
2018-2019 19.3% 74.5% 25.5%
(1) Calculated as change in adjusted NAV per share plus dividends paid.
Governance and culture
Integration of leadership and risk management
The Board is fully committed to compliance with the UK Corporate Governance Code (the "UK Code") as published in June 2016 by
the Financial Reporting Council and will comply with all those provisions of the King IV Report on GovernanceTM.for South Africa
2016 that are not included in the UK Code. I am pleased to report that we are compliant with all principles of the UK Code. The JSE
has granted the Company dispensation not to report on its application of the King IV Code, provided that Sirius continues to comply
with the mandatory corporate governance provisions pursuant to paragraph 3.84 of the JSE Listing Requirements. For the next
financial year, the Company will be working towards full compliance with the new UK Corporate Governance Code which has
replaced the UK Code for reporting periods beginning after 1 January 2019.
As previously communicated the Board considered that in light of new regulation regarding the rotation of auditors, in line with best
practice and due to the length of time KPMG had acted as audit firm to the Company, a formal audit tender process would be
undertaken during the reporting period. Following the completion of the audit tender process Ernst & Young LLP were duly
appointed and latterly re-appointed as auditors from the date of the AGM in September 2018.
Thank you and outlook
Effective collaboration
On behalf of the Board I would like to thank all those connected to Sirius for their efforts and hard work that together allowed the
Company to record such an impressive year. We feel that the outlook for Sirius continues to be positive with its strategy focused on
delivering organic growth in rental income in its existing assets and selective asset recycling activity and a long-term strategic
partnership with AXA IM - Real Assets to look forward to. This positions the Company well for further growth and shareholder
returns into the new financial year and beyond.
Danny Kitchen
Chairman
31 May 2019
Asset management review
Increased portfolio quality and potential
EUR25.6m
proceeds from the sale of three assets
EUR116.4m
of new asset acquisitions completed or notarised in the period
EUR87.8m
total annualised rent roll
EUR5.78
average rate per sqm
Introduction
The Sirius internal asset and property management platform continues to be a significant driver of value and key to the Company's
ability to deliver attractive returns to shareholders. The operating platform has been developed over many years and there has
been major investment into systems and processes as well as the development of people. As a result, the Company is now
benefiting from the specialist knowledge and skills that it has built across multiple functions including acquisitions, disposals,
financing, capital investment and development, lettings, service charge recovery, supplier management, debt collection, lease
management and financial reporting. The year under review has seen further improvements across these disciplines and the
Company has continued to grow profits and add value to the portfolio.
Asset recycling, acquisitions and disposals
During the year to 31 March 2019 Sirius has continued to execute its strategy of selective asset acquisition and recycling. Funds
were generated to invest into new acquisitions from the following sources:
- EUR39.0 million from the equity raise that completed in March 2018;
- EUR25.6 million from the disposal of three assets in Bremen; and
- EUR22.1 million from a new banking facility with PBB Deutsche Pfandbriefbank.
To date Sirius has invested or plans to invest these funds into the following acquisitions:
- four assets totalling EUR65.1 million located in Friedrichsdorf (near Frankfurt), Fellbach (near Stuttgart), Mannheim and
Bochum which all completed in the financial year.
- two assets totalling EUR15.2 million located near Hamburg and Freiburg completed shortly after the financial year end.
- Strong pipeline, expecting to acquire another asset for approximately EUR35.0 million that will be part financed by PBB
Deutsche Pfandbriefbank.
In addition to this the Company announced a new venture with AXA IM - Real Assets whereby it has agreed to sell 65% of its
interest in five assets, whilst retaining the other 35% as Sirius' initial share in the venture. The transaction is expected to generate
around EUR70.0 million of new equity for the Company to invest which, when combined with new lending provides the funds for a
further EUR120.0 million of acquisitions. The Company has developed a promising pipeline of potential opportunities for this, as well as
new opportunities for the venture itself.
The disposals that occurred in the period included the non-core Bremen Hag and Bremen Brinkmann assets which had been
targeted for sale as well as the smaller mixed-use Bremen Dotlinger asset. The disposal of the Bremen assets represents a
successful exit from a challenging market. In addition to local market conditions, these assets were unable to make the returns that
the Company achieves on other assets due to the significant amount of vacant space they had which was considered unsuitable for
worthwhile investment. The three sites were sold at an EPRA net initial yield of 3.5% and generated equity of EUR25.6 million, which
can now be reinvested in opportunities with greater scope for income and valuation growth. In addition to the site disposals referred
to above, the Company sold a non-income producing piece of land and a residential building, generating proceeds of EUR1.8 million
which will be re-invested into the Company's capex investment programmes.
A summary of the disposal activity in the year to 31 March 2019 is included in the table below:
Annualised
Total acquisition rent Annualised EPRA net
proceeds roll* acquisition NOI initial yield*(1) Occupancy
Site EUR000 sqm EUR000 EUR000 % %
Bremen Brinkmann 15,500 121,501 1,846 864 5.2 56
Bremen Hag 3,800 59,153 478 (252) (6.2) 18
Bremen Doetlinger 6,300 10,273 479 346 5.1 82
Rostock land 1,200 - - (8) n/a n/a
Markgroningen Residential Building 625 1,331 - - n/a n/a
Total 27,425 192,258 2,803 950 3.2 n/a
(1) Includes estimated purchaser costs.
* See glossary section of the Annual Report and Accounts 2019.
The year to 31 March 2019 was another year that featured significant acquisition activity. A summary of the acquisition activity in
the year, which includes the two assets located in Saarbrucken and Dusseldorf that were prepaid in the prior financial year, are
detailed in the table below:
Acquisition
Total non-
investment recoverable EPRA
(incl. Annualised service Acquisition Annualised net
acquisition Total Acquisition Acquisition acquisition charge maintenance acquisition initial
costs) acquisition occupancy vacant rent roll* costs costs NOI* yield*(1)
EUR000 sqm % sqm EUR000 EUR000 EUR000 EUR %
Completed
Saarbrucken 28,065 47,350 65 16,744 3,057 (491) (43) 2,524 9.0
Dusseldorf II 8,084 8,672 80 1,704 627 (83) (8) 536 6.6
Friedrichsdorf 17,707 17,306 92 1,426 1,357 (87) (10) 1,260 7.1
Fellbach 12,070 25,420 79 5,329 1,043 (139) (23) 881 7.3
Mannheim 9,616 15,052 69 4,688 801 (207) (18) 576 6.0
Bochum 25,705 55,650 95 2,676 2,591 (260) (50) 2,282 8.9
Subtotal 101,247 169,450 81 32,567 9,476 (1,267) (152) 8,059 8.0
Notarised
Buxtehude 8,690 28,532 - 28,532 - (426) (51) (479) (5.5)
Teningen 6,497 20,062 88 2,486 806 (244) (20) 542 8.3
Subtotal 15,187 48,594 36 31,018 806 (670) (71) 63 0.4
Total 116,434 218,044 71 63,585 10,282 (1,937) (223) 8,122 7.0
(1) Includes estimated purchaser costs.
* See glossary section of the Annual Report and Accounts 2019.
The Company's acquisition strategy has continued to focus on acquiring assets in the areas outlying Germany's "big seven" cities
where it has been establishing critical mass. Of the eight assets completed or notarised in the period five of them are located within
the Hamburg, Dusseldorf or Frankfurt markets where the Company has strong knowledge and will benefit from operational synergies.
The Saarbrucken asset was acquired for total acquisition costs of EUR28.1 million representing an attractive EPRA net initial yield of
9.0%, which is partially reflective of the planned move out of the major tenant and a further 16,744 sqm of vacant space, providing
excellent value add potential. The major move out is scheduled for September 2019 and relates to over 8,000 sqm on which the
tenant is paying a rate of EUR7.26 per sqm. To date the Company has re-let 7,640 sqm at a rate of EUR7.23 per sqm. As a result, we
expect this acquisition to generate an attractive return on equity particularly when taking into consideration it is financed with a
seven year EUR18.0 million loan facility from the local Saarbrucken Sparkasse charged with an all-in fixed interest rate of 1.53%.
The two assets acquired or notarised for completion in the year that are not considered to be in the big seven cities are located in
Teningen near Freiburg and Bochum which are regarded as well-established and desirable industrial areas that fit well into the
Sirius business model. The investment case for Bochum is similar to that of Saarbrucken in that it was acquired with an EPRA net
initial yield of 8.9% due, in part, to the expected move out of the anchor tenant from 25,898 sqm in June 2019. Having secured two
replacement tenants paying a higher rate for all of the vacated space the Company is well positioned to generate attractive income
and valuation increases from this asset. The remaining acquisitions that completed in the period are in locations the Company has
excellent market knowledge due to existing operations and provide the Company with a combination of high-quality, stable income
alongside opportunity to utilise its operating platform to grow income and extract significant value.
The acquisition assets that actually completed in the year under review were purchased on a blended EPRA net initial yield of 8.0%
which is significantly higher than general market evidence in this sector. In addition, with the opportunity to replace existing tenants
at higher rates and in excess of 32,000sqm of space to let, we are confident about the prospects for the new acquisitions.
Market conditions continue to make it more challenging to acquire properties which fit the Company's investment returns profile.
Within the financial year the Company reviewed more than 1,000 investment opportunities in order to acquire or notarise the eight
assets described above. This demonstrates the extent of work required to find investments and the discipline of our approach in
ensuring we continue to acquire the right assets. By analysing these many opportunities, a wealth of market information is built up
that allows us to assess where the market is trading- and how it is developing and track the history of assets that may come back
on the market in the future. Our focus for value generation is on assets that other owners find a challenge and where there is less
competition allowing us to dictate the acquisitions process. Despite increased pricing expectations from sellers the Company does
not intend to alter its investment approach and is confident of being able to continue to source attractive opportunities.
Rental growth and new lettings
The year under review was an excellent one for rental growth with the Company delivering rental and other income from investment
properties of EUR84.4 million up from EUR71.8 million from last year. The Company also delivered a record 7.1% increase in like-for-like
annualised rent roll, building on a strong 6.2% increase in the prior period. Two thirds of the increase in like-for-like organic growth
was achieved as a result of increases in rate whilst occupancy contributed one third. This year's result was even more pleasing
when considering the impact of the expected move-out in the first half of the financial year of three large tenants contributing
EUR1.1 million of annualised rent roll on assets that had been recently acquired. The new financial year is expected to be similarly impacted
by some expected move outs in the first half of the financial year however progress on the re-letting of this space has been
promising. Total annualised rent roll grew from EUR79.5 million(1) at the start of the period to EUR87.8 million at year end. The increase
in annualised rent roll of EUR8.3 million is explained as follows:
- EUR3.0 million lost from disposals;
- EUR5.8 million gained from acquisitions; and
- EUR5.5 million increase from organic growth on the existing portfolio
(1) Includes EUR3.7 million of annualised rent roll relating to the Saarbrucken and Dusseldorf II assets that were prepaid at
31 March 2018 and completed on 1 April 2019
Whilst like-for-like occupancy increased to 85.8% from 83.7%, total occupancy which includes the impact of acquisitions and the
disposal of three sites with a total of 98,000 sqm of vacant space increased from 79.2% to 86.1%. Similarly, whilst the average rate
per sqm for the like-for-like portfolio increased by 4.4% to EUR5.88 per sqm (31 March 2018: EUR5.63), the total portfolio average rate
increased by 5.9% to EUR5.78 per sqm (31 March 2018: EUR5.46) reflective of both higher rates being achieved on acquisition sites and
the lower rates in disposal sites. Both the strong rate increases and the reduction of vacancy reflect the Company's ability to deliver
uplifts and let space through active asset management as well as the positive impact of asset recycling.
Tenant move-ins of 171,000 sqm were at an average rate of EUR7.25 per sqm compared to move-outs of 141,000sqm at an average
rate of EUR6.86 per sqm. Contractual rent increases and uplifts upon renewal contributed a further EUR2.2*million of annualised rent roll
in the period. These contractual escalations and renewal increases represent a 2.9% elevation on the rents at the start of the
financial year. One of the main drivers behind the strong lettings performance has been the generation of over 14,000 enquiries in
the year of which 80% came from the Company's internally developed websites and a large number of online portals through which
Sirius advertises. Improving the quality of leads is a continuing focus for the internal sales and marketing platform and in the period
Sirius delivered an enquiry to sales conversion ratio of 14% which resulted in approximately 2,000 new deals being signed in the
year. Sirius has further developed its external broker channels to focus mainly on larger lettings and is pleased to report that a
number of attractive long-term deals were secured through this channel in the period including Land Berlin at Berlin Tempelhof, a
well-known Stuttgart based German sports car manufacturer at Weilimdorf and FOM, an educational body at Neuss.
* Uplifts include investment rents
Capex investment programmes
The Group's ability to generate high returns from its capex investment programmes continues to be a key differentiator of Sirius
from its competitors and an important driver of income and valuation growth for the Company. The investments the Company
undertakes are specifically designed to unlock income and value through the transformation of vacant and sub-optimal space into
both higher quality conventional space and flexible workspace that fit the Company's innovative range of Smartspace products.
This provides the Company with optionality for space configuration, particularly the difficult space on industrial and modern
business parks that most other operators leave as structural vacancy. This is one of the primary drivers behind some of the
exceptional asset level IRRs that have historically been achieved. Examples of these can be found in the case study section within
this report.
The original capex investment programme commenced in January 2014 and was focused on just over 200,000 sqm of sub-optimal
space in need of transformation. We are pleased to report that as at 31 March 2019 this programme is substantially complete with a
total of 195,415sqm of this space completely refurbished and the remaining 9,493 sqm either in the process of being refurbished or
awaiting permissions to proceed. A total of EUR23.7 million has been invested into the transformed space and, at 83% occupancy, it is
generating EUR12.6 million of annualised rent roll representing an income return on investment of 53.2%. This return does not include
the additional benefit of improved cost recovery from letting this space nor the valuation increase estimated at more than
EUR100.0 million that has been generated from the upgrading of the space and incremental income realised.
More detail on the original capex investment programme to date is provided in the following table:
Annualised
Annualised rental roll* Rate
rental roll* increase Occupancy Rate per sqm
Original capex Investment Actual increase achieved to achieved to per sqm achieved to
investment programme budgeted spend budgeted March 2019 Occupancy March 2019 budgeted March 2019
progress Sqm EURm EURm EURm EURm Budgeted % % EUR EUR
Completed 195,415 25.2 23.7 10.8 12.6 81 83 5.70 6.50
In progress 6,630 1.4 0.5 0.4 0.1 88 - 5.39 -
To commence in next
financial year 2,863 0.5 - 0.1 - 84 - 5.13 -
Total 204,908 27.1 24.2 11.3 12.7 81 - 5.68 -
* See glossary section of the Annual Report and Accounts 2019.
Although the majority of income has already been realised from the original capex investment programme, some further potential
for increasing rents and values remains mainly from completing the investment into the remaining 9,493 sqm of space that has not
been fully renovated. In order to complete this a further EUR1.8 million of investment is required to generate EUR0.5 million of extra
annualised rent roll. Furthermore, it can be seen that the original investment programme will be delivered well below budget and the
income achieved is far greater than first forecast. This is a reflection of the Company's increased operational efficiency and
effectiveness in delivering and realising a wide range of investment projects across multiple locations.
In April 2016 the Company commenced the new acquisitions capex investment programme on assets acquired after that date. The
Company identified 122,168sqm of sub-optimal space across 21 new assets in need of investment. Sirius has executed a clear
strategy to acquire assets with high levels of difficult vacancy which it has full confidence in transforming. The incremental income
realised from the continual investment into such space has played a key role in allowing the Company to achieve its targets and
deliver consistent returns. Due to the nature of the underlying space the development and refurbishment work within the new
acquisitions capex investment programme is more capital intensive and expected to generate lower income returns than the
original capex investment programme, but the potential for increase in valuation is greater given the extent of the space upgrade
being undertaken. A total investment of EUR31.0 million is expected to generate EUR9.4 million of incremental annualised rent roll on a
blended occupancy of 85%. The details of this programme including progress to date is highlighted below:
Annualised
Annualised Rent roll* Rate
rent roll* increase Occupancy Rate per sqm
New acquisitions Investment Actual increase achieved to Occupancy achieved to per sqm achieved to
capex investment budgeted spend budgeted March 2019 Budgeted March 2019 budgeted March 2019
programme progress Sqm EURm EURm EURm EURm % % EUR EUR
Completed 53,148 10.7 9.7 4.2 2.6 84 54 7.91 7.48
In progress 26,716 12.5 2.3 2.4 0.8 91 - 8.07 -
To commence in next
financial year 42,304 7.8 - 2.8 - 82 - 6.63 -
Total 122,168 31.0 12.0 9.4 3.4 85 - 7.52 -
* See glossary section of the Annual Report and Accounts 2019.
With continuing strong occupier demand for both conventional and flexible workspace the speed at which this space can be
transformed is important. As at 31 March 2019 a total of 53,148sqm was fully converted with an investment of EUR9.7 million
generating incremental annualised rent roll of EUR2.6 million on occupancy of 54%.
What remains in this programme is a further investment of EUR18.0 million into 69,021 sqm of space which is expected to complete
over the next two financial years. In total the programme is expected to generate a further EUR6.0 million of annualised rent roll over
the next two years. It is difficult to say exactly what impact on valuations this investment will have but, as mentioned above, given
the high upgrade of the space it is expected to very positive. As a result, we are targeting total returns at the asset level being
similar to those achieved by the original capex investment programme.
Improving and well diversified portfolio
Whilst the Company has successfully executed a strategy of recycling equity out of mature and non-core assets and into assets
with greater opportunity, the well diversified characteristic of the Company's rental income has remained consistent. The stable
income which comes from the top 50 anchor tenants which are predominantly multinational corporations account for approximately
44% of total annualised rent roll whilst the more flexible, higher rate income from the Company's Smartspace products accounts for
approximately 6% of the annualised rent roll. The remaining 50% of Sirius' annualised rent roll is contracted to over 2,400 SME
tenants which is Sirius' key target market group and which it is able to attract in significant volumes through its in-house marketing
and lettings platform. The capability to let large quantities of existing vacancy and newly created space by utilising its in house
resources is a key competitive advantage for Sirius and results in a significantly de-risked real estate portfolio than would typically
be associated with the asset class and a 2.8 year weighted average lease expiry. As a result, the Company benefits from the high
yields and value-add opportunities associated with industrial property whilst mitigating risk to a far greater extent than its
competition.
The table below illustrates the tenant mix across our portfolio at the end of the reporting period:
% of total
No. of Annualised annualised Rate
tenants as at Occupied rent roll* rent roll* per sqm
Type of tenant 31 March 2019 sqm EURm % EUR
Top 50 anchor tenants(1) 50 584,299 38.3 44 5.47
Smartspace SME tenants(2) 2,310 59,576 5.5 6 7.70
Other SME tenants(3) 2,458 621,883 44.0 50 5.89
Total 4,818 1,265,758 87.8 100 5.78
(1) Mainly large national/international private and public tenants.
(2) Mainly small and medium-sized private and public tenants.
(3) Mainly small and medium-sized private and retail tenants.
* See glossary section of the Annual Report and Accounts 2019.
Opportunity within vacancy
Unlike many other property companies, the vacancy within Sirius' portfolio is viewed as a major opportunity rather than a burden.
The Company is actively looking to acquire assets with vacancy, particularly that which it can acquire on a discounted basis due to
the extent of work and investment required to bring the space into lettable condition. As such the headline vacancy number that the
Company reports is significantly different than the vacancy that is available to let due to the large amount of space that is the
subject to ongoing investment. Additionally, the Company has historically held substantial structural vacancy within its non-core
sites but following the disposal of the non-core assets in the period, structural vacancy has reduced to 2% which is low for a large
portfolio of industrial assets and reflective of the manner in which the Company invests and unlocks value in spaces that other
operators would disregard. The analysis below details sub-optimal space and vacancy at 31 March 2019 and highlights the
opportunity from developing this space as well as the impact of selling the non-core sites.
Vacancy analysis - March 2019
Total space (sqm) 1,469,675
Occupied space (sqm) 1,265,758
Vacant space (sqm) 203,917
Occupancy 86%
% of
total Capex ERV*
space investment (post investment)
% sqm EUR EUR
Subject to original capex investment programme 1 9,493 1,839,985 459,891
Subject to acquisition capex investment programme 5 69,021 18,031,044 5,950,963
FlexiLager vacancy - 4,607 - 282,841
Total sub-optimal space 6 83,121 19,871,029 6,693,695
Structural vacancy core sites 2 29,033 - -
Smartspace 1 16,817 - 1,295,668
Other vacancy 5 74,946 3,927,737 5,152,934
Total lettable space 6 91,763 - -
Total sub-optimal space/vacancy 14 203,917 23,798,766 13,142,297
* See glossary section of the Annual Report and Accounts 2019.
As illustrated in the table above, the total sub-optimal space and vacancy of 14% can be reduced to 6% when taking out the space
that requires investment and the 2% structural vacancy. The Company has consistently been able to run the portfolio with 6%
vacancy levels based on space that is available to let. Therefore, upon completion of the capex investment programmes an
occupancy level of 92% could be reached. However, it is unlikely that the Company will reach this position because it is continually
looking to re-fuel the new acquisitions capex investment programme by acquiring assets with significant amounts of vacant space.
Based on current market conditions this strategy is considered to be the most accretive way of growing the business and improving
shareholder returns.
In order to highlight how developing the sub-optimal space and vacancy may impact the valuation of the Company's portfolio, it is
useful to separate the mature portfolio from the value-add portfolio. The table below illustrates this based on the 31 March 2019
valuation.
Annualised Capital Vacant
rent roll* Book value* NOI* value* psqm Gross yield* Net yield* space Rate* psqm Occupancy*
EURm EURm EURm EUR % % sqm EUR %
Core value-add 46.3 574.5 39.6 637 8.1 6.9 170,993 5.98 79.0
Core mature 41.5 558.0 38.9 823 7.4 7.0 32,923 5.58 95.0
Other - - (1.7) - - - - - -
Total 87.8 1,132.5 76.7 717 7.8 6.8 203,917 5.78 86.1
* See glossary section of the Annual Report and Accounts 2019.
The mature portfolio now represents 49% of the total portfolio and typically includes assets that have occupancy levels in excess of
90% and hence reduced differentials between gross and net yields due to higher cost recovery. The remaining organic opportunity
within the mature portfolio is through letting the remaining vacancy and exploiting the reversion in the existing rents, particularly
from the upgrading of space vacated by existing tenants. In spite of the valuation increase already experienced in this segment of
the portfolio, the gross yield of 7.4% remains higher than general market evidence of recently traded assets and portfolios.
The value add portfolio however has a higher gross yield and differential with net yield indicating the significant opportunity within
the 170,993 sqm of vacant space that these assets contain. Of this space 77,570 sqm is subject to ongoing specific capex
investment programmes which, as detailed in this report, have been generating excellent returns from both an income and
valuation perspective. These programmes are expected to add an additional EUR4.7 million of annualised rent roll from a further
investment of EUR19.3 million. When the occupancy of the value add portfolio increases due to the completion and let up of space
related to the capex investment programmes our expectation is for gross yields to move towards that of the core mature portfolio
and higher cost recovery to reduce the differential between net and gross yields.
Smartspace and First Choice
Smartspace continues to be a successful operation for Sirius and is particularly popular with tenants seeking flexible workspace
solutions. The four Smartspace products and the newly developed First Choice Business Centre concept are specifically designed
to create high-quality workspace from sub-optimal space that, when let with a fixed price, provide the flexible offering that small
businesses increasingly desire.
The annualised rent roll generated from Smartspace products and First Choice increased from EUR5.2 million to EUR5.5 million in the
year under review. Smartspace occupancy increased to 74% (31 March 2018: 70%) but even more pleasing was the 7.1% increase
in average rate seen in the year which increased to EUR7.70 per sqm and followed an increase of 8.1% in the prior period. Such
movements in rate reflect not just the benefit to pricing of continued high demand for Smartspace products but also how the
Company captures reversionary value through contractual uplifts and increases on renewal.
From an investment point of view, the returns that are achieved from Sirius' assets are significantly enhanced by Smartspace
conversion as it is created primarily through the transformation of sub-optimal or vacant space which is acquired for low cost into
high-quality offices, storage space and workboxes. During the period a further 1,817sqm of Smartspace Office and 1,894sqm of
Smartspace storage was created.
In the year to 31 March 2019 the Company continued to build on the success of its First Choice Business Centre that opened in
October 2017 in Wiesbaden (and which at year end had occupancy of 90%), by opening a new centre in November 2018 located in
Neuss. The premium office specification of the First Choice Business Centres clearly distinguishes the brand as a five-star office
space product from the three-star Smartspace offices, and we are hopeful that the concept can be developed successfully in other
Sirius locations. The table below provides further detail on the Smartspace and First Choice products:
Smartspace Product Total Occupied Occupancy Annualised % of total Rate per sqm
Type sqm sqm % rent roll* Smartspace (excl. Service
(excl. service annualised charge)
charge) EUR'000 rent roll* EUR
%
First Choice Office 2,795 1,358 49 329 6 20.20
SMSP Office 33,331 26,320 79 2,749 50 8.70
SMSP Workbox 5,964 5,567 93 342 6 5.12
SMSP Storage 30,702 22,777 74 1,823 33 6.67
SMSP Subtotal 72,792 56,022 78 5,243 95 7.80
SMSP FlexiLager 8,162 3,554 44 263 5 6.17
SMSP TOTAL 80,953 59,576 74 5,506 100 7.70
* See glossary section of the Annual Report and Accounts 2019.
Financial review
These condensed consolidated financial results for the twelve months ended 31 March 2019 are themselves not audited but are
extracted from audited information. The audited Group annual financial statements were audited by Ernst & Young LLP, who
expressed an unmodified opinion thereon. The audited Group annual financial statements and the auditor's report thereon are
available for inspection at the Company's registered office. The directors take full responsibility for the preparation of the
condensed consolidated financial results and that the financial information has been correctly extracted from the underlying audit
Group annual financial statements.
Consistent shareholder accounting returns and further future potential
Strong organic growth and future potential through new venture
The Company delivered another strong financial performance in the year ended 31 March 2019 despite the impact to earnings of
new acquisitions completing later than expected. The earnings shortfall due to the timing of acquisitions was however more than
offset by the performance of the existing portfolio which contributed to an increase in rental and other income from investment
properties to EUR84.4 million from EUR71.8 million. The Company recorded a 7.1% increase in like-for-like annualised rent roll which
contributed to a 13.3% like-for-like increase in the portfolio book value in the period. Part of the valuation increases has derived
from further yield compression since March, but the larger part has encouragingly come from income improvements which have
positively impacted net asset value. The corresponding increase in adjusted net asset value per share combined with total
dividends paid in the period of 3.23c per share has resulted in a total shareholder accounting return of 19.3%, the fourth
consecutive year of returns in excess of 15%.
As described in the asset management review section of this report, the year under review was another one of high transactional
volume with a total of three asset disposals, eight asset acquisitions (six completing and two notarised in the period) and a new
loan facility completed with PBB Deutsche Pfandbriefbank. In addition, the Company announced the establishment of a new
venture with AXA IM - Real Assets in March 2019 through the agreement to sell 65% of the Company's interests in five existing
entities which is expected to complete in July 2019. With an implied property purchase price of EUR168.0 million compared to the last
reported book value of EUR141.1 million at 30 September 2018 the venture will realise excellent value for the Company, provides
further acquisition firepower through the equity released from the transaction, opens up investment opportunities previously not
open to Sirius and creates an attractive income stream from Sirius' ongoing management of the assets.
Trading performance and earnings
The Company reported a profit before tax in the year ended 31 March 2019 of EUR144.7 million (31 March 2018: EUR89.6 million)
representing a 61.5% increase from the prior year, including EUR99.9 million (31 March 2018: EUR63.5 million) of gains from property
revaluations net of capex and adjustments in respect of lease incentives invested.
Funds from operations(1) increased by 26.0% to EUR48.4 million (31 March 2018: EUR38.4 million) of which approximately half has come
from the strong organic growth within the existing portfolio and the other half has come from the impact of asset recycling activity
being realised. The capex investment programme, contracted escalations, uplifts on renewals and other asset management
initiatives have all contributed to the strong organic rental income growth, all of which are described in more detail in the asset
management review section of this report.
(1) Refer to note 25 in the Annual Report.
On a per share basis, basic and diluted EPS, which includes the portfolio valuation gains described in the next section, showed a
43.8% increase to 12.78c per share whilst adjusted EPS increased by 16.1% to 4.58c per share. The differential between adjusted
EPS and basic EPRA EPS and diluted EPRA EPS was significantly less than that at 31 March 2018 due to the impact of non-
recurring items including restructuring costs and costs relating to share awards that impacted the prior year. The contribution of
acquisitions acquired from the proceeds of the March 2018 equity raise and the disposals in the period was lower than expected
due to the timing of completions which is reflective of how the Company is being more selective in its investing and how it is
prioritising quality rather than speed to ensure that returns are not compromised. As a result, it was pleasing to see the strong
organic performance compensate for the delay in timing of acquisitions.
Earnings 31 March 2019 Earnings 31 March 2018 Change
EUR000 No. of shares cents per share EUR000 No. of shares cents per share %
Basic EPS 128,657 1,006,966,788 12.78 81,272 914,479,339 8.89 43.8
Diluted EPS 128,657 1,011,666,788 12.72 81,272 939,394,339 8.65 47.1
Adjusted EPS 46,096 1,006,966,788 4.58 36,041 914,479,339 3.94 16.1
Basic EPRA EPS 44,995 1,006,966,788 4.47 27,783 914,479,339 3.04 47.2
Diluted EPRA EPS 44,995 1,011,666,788 4.45 27,783 939,394,339 2.96 50.5
Total revenue which comprises both rental and other income from investment properties and service charge income increased from
EUR123.7 million to EUR140.1 million in the period. Total annualised rent roll at the end of the period increased by 10.4% from
EUR79.5* million to EUR87.8 million of which 70% came from like-for-like organic growth and 30% from asset recycling. The movement in
annualised rent roll is described in more detail in the asset management review within this report.
*Including two assets prepaid as at 31 March 2019 that completed on 1 April 2019.
With a starting rent roll for the new year of EUR87.8 million, existing resources to acquire more assets, the continuation of the
Company's capex investment programmes and the significant contribution expected from acquisitions funded by proceeds from the
new venture with AXA IM - Real Assets, the Company is well positioned to grow rent roll and FFO into the new financial year and
beyond. In the new financial year, the Company expects the profile of annualised rent roll growth to mirror that of the financial year
under review where strong growth in the second half of the financial year follows a first half impacted by some large expected move
outs from recently acquired assets.
In addition to the like-for-like annualised rent roll increases seen over the last few years there have also been improvements in
service charge recovery where leakage in recently acquired sites in particular has decreased materially as higher occupancy and
specific allocation and recovery techniques have begun to have a positive effect.
Portfolio valuation and net asset value
The portfolio, including assets held for sale, was independently valued at EUR1,136.2 million by Cushman & Wakefield LLP at
31 March 2019 (31 March 2018: EUR969.8(1) million) which converts to a book value of EUR1,132.5 million after the provision for tenant
incentives. The increase in book value of the portfolio of EUR165.2 million in the period is illustrated in the following table.
31 March
2019
EUR000
Total investment properties at book value as at 31 March 2018(1) 967,317
Additions 65,514
Capex Investment 27,127
Disposals (27,357)
Surplus on revaluation above capex investment 100,092
Adjustment in respect of lease incentives (205)
Total investment properties at book value as at 31 March 2019 1,132,488
(1) Including assets prepaid at 31 March 2018 that completed on April 1 2018
The portfolio that was owned for the full period increased in book value by EUR128.2 million or 13.3% whilst the assets acquired in the
year under review had a book value of EUR3.6 million above purchase price, offsetting most of the acquisition costs of EUR4.8 million.
The increase in value of the newly acquired sites in the period shows that despite increased pricing pressure and competition for
assets in the German market, the Company is maintaining its selective approach and discipline in its investment decisions.
The valuation increase within the existing portfolio is driven 55% by income growth and 45% from approximately 38 bps of gross
yield compression seen in the period. Despite yields tightening the average gross yield of the portfolio of 7.8% remains in our view
reasonably defensive when compared to large transactions reported in the market at yields well below this level. Whilst like-for-like
valuation increases have averaged close to 10% year on year, like-for-like increases in annualised rent roll have averaged close to
6% demonstrating the extent to which organic growth has contributed to the capital value of the portfolio. The development of our
portfolio valuations over the last five years can be seen in the table below:
March 2015 March 2016 March 2017 March 2018 March 2019
Portfolio book valuation (EURm) 545.6 687.4 823.3 967.3(1) 1,132.5
Annualised rent roll* (EURm) 50.0 60.5 71 79.5 87.8
Gross yield* (%) 9.2 8.8 8.6 8.2 7.8
Like-for-like annualised rent roll
increase* (%) 5.2 5.9 5.1 6.2 7.1
Like-for-like valuation increase (%) 6.4 10.9 8.5 11.6 13.3
Occupancy* (%) 79.0 80.0 80.5 79.2 86.1
Rate* (EURsqm) 4.75 5.06 5.27 5.46 5.78
(1) Including assets prepaid at 31 March 2018 that completed on April 1 2018 at cost
* See glossary section of the Annual Report and Accounts 2019.
The portfolio as at 31 March 2019 comprised 55 assets with a book value of EUR1,132.5 million and can be reconciled to the
Cushman & Wakefield market valuation as follows:
31 March 2019 31 March 2018
EURm EURm
Investment properties at market value 1,136.2 933.7
Uplift in respect of assets held for sale - 1.0
Adjustment in respect of lease incentives (3.7) (3.5)
Balance as at period end 1,132.5 931.2
As illustrated above, the 31 March 2019 book value of EUR1,132.5 million represents an average gross yield of 7.8% (31 March 2018:
8.1%) which translates to a net yield of 6.8% (31 March 2018: 7.2%) and an EPRA net yield (including purchaser costs) of 6.3%
(31 March 2018: 6.8%). The average capital value per sqm of the like-for-like portfolio of EUR717 (31 March 2018: EUR642) remains well
below replacement cost and allows the Company to upgrade space and offer its products at lower prices than its competitors and
still make higher returns. This is a significant competitive advantage for Sirius and one of the main reasons that its business model
is able to produce higher returns with lower risk than the typical operator of light industrial and office business parks in Germany.
The valuation increases along with profit retention has meant the net asset value per share increased to 71.01c at 31 March 2019,
an increase of 12.6% from 63.09c as at 31 March 2018. Similarly, the adjusted net asset value (1) per share increased to 75.17c at
31 March 2019, an increase of 14.4% from 65.71c as at 31 March 2018. In addition, the Company has paid out 3.23c per share of
dividends during the financial year, which equates to around 72% of FFO, giving a total shareholder accounting return (adjusted
(1) Excludes the provisions for deferred tax and derivative financial instruments.
NAV growth plus dividends paid) of 19.3% (31 March 2018: 17.0%). The movement in adjusted NAV per share is explained in the
following table:
cents per share
NAV per share as at 31 March 2018 63.09
Recurring profit before tax 4.52
Surplus on revaluation 9.77
Current and deferred tax charge (1.56)
Scrip and cash dividend paid (3.10)
Share awards and non-recurring items (1.71)
NAV per share at 31 March 2019 71.01
Deferred tax and derivatives 4.16
Adjusted NAV per share at 31 March 2019 75.17
EPRA adjustments(1) (0.35)
EPRA NAV per share at 31 March 2019 74.82
(1) Grant of 2018 LTIP shares
The EPRA net asset value ("EPRA NAV") per share, which excludes the provisions for deferred tax and derivative financial
instruments but includes the potential impact of shares issued in relation to the Company's long-term incentive programmes, was
74.82c (31 March 2018: 64.18c).
Financing
The Company continues to seek to optimise its lending and in addition to secured debt has continued to consider alternatives
including unsecured borrowings such as corporate bonds, convertible bonds and Schuldschein agreements. During the year to 31
March 2019 the Company completed a new five-year facility with Deutsche Pfandbriefbank AG for EUR56.0 million which includes a
margin of 1.20% and amortisation of 2.0% per annum. The facility has been fixed by way of a five year swap. The fact that the
Company is able to secure such attractive financing terms on industrial properties, warehouses and secondary offices reflects the
confidence of lenders in Sirius' asset and property management platform and the way in which it can enhance cash flows and
values whilst mitigating risk. The unsecured debt market offers interesting potential for financing flexibility and we continue to
explore opportunities for that as and when we have new assets to finance or some of our portfolios' financing begins to expire.
The Group's total cost of borrowings currently stands at 2.0% (31 March 2018: 2.0%) whilst the weighted average debt expiry was
4.3 years (31 March 2018: 5.2 years). Total debt at the period end was EUR386.1 million (31 March 2018: EUR373.1 million) an increase
of EUR13.0 million from last year, which was made up of EUR22.1 million of new borrowings drawn down in the period and EUR9.1 million of
scheduled amortisation.
The Group's gross loan to value ("gross LTV") ratio reduced to 34.1% (31 March 2018: 40.8%), well within the Company target of
40% whilst net loan to value ratio which includes unrestricted cash balances was 32.4% (31 March 2018: 31.9%).
Dividend
The Board communicated in the Annual Report two years ago that it would consider temporarily increasing the Company's dividend
pay-out ratio above the 65% of FFO policy when material asset recycling and equity raise activity occurs in order to offset the
impact from the time lag to invest or reinvest. In the financial year to 31 March 2018 the Board decided to increase the pay-out ratio
to 75% of FFO due to the asset recycling relating to the disposal of EUR103.0 million of assets. For the year to 31 March 2019 the
Board has decided to pay-out 70% of FFO in order to offset the timing impact of investing the capital raised in March 2018 and
reinvesting the proceeds generated from disposals in the period. The Company is pleased to report that it expects to have fully
invested these proceeds in the first half of the new financial year, although it then expects to receive the proceeds of the AXA IM -
Real Assets transaction in July 2019. The team is already reviewing acquisition opportunities for the EUR120.0m of firepower that this
transaction will deliver. The Board has declared a final dividend of 1.73c per share for the six-month period ended 31 March 2019
(based on 70% of FFO), which is an increase of 8.1% on the 1.60c dividend relating to the same period last year (based on 75% of
FFO). The total dividend for the year is 3.36c per share, an increase of 6.3% on the 3.16c total dividend for the year ended 31
March 2018. The table below shows the dividends paid and pay-out ratios over the last five years.
Interim Final dividend per Total
dividend per share dividend per Pay-out ratio
share (cents) (cents) share (cents) (% of FFO)
Year ending March 2015 0.77 1.61 2.38 65%
Year ending March 2016 0.92 1.30 2.22 65%
Year ending March 2017 1.39 1.53 2.92 65%
Year ending March 2018 1.56 1.60 3.16 75%
Year ending March 2019 1.63 1.73 3.36 70%
It is expected that for the period's final dividend, the ex-dividend date will be 10 July 2019 for shareholders on the South African
register and 11 July 2019 for shareholders on the UK register. It is further expected that for shareholders on both registers the
record date will be 12 July 2019 and the dividend will be paid on 22 August 2019. A detailed dividend announcement will be made
in due course, including details of a scrip dividend alternative (which is subject to the receipt of SARB approval).
Outlook
The year to 31 March 2019 was another successful one boosted by excellent organic growth and progress on asset acquisitions
and recycling despite an increasingly challenging market in which to find assets that meet the Company's return expectations. The record
like-for-like annualised rent roll increase was supported by the continued upgrading of space as a result of the capex
investment programmes, which combined have contributed to strong valuation gains. The agreement of a new venture with AXA IM
- Real Assets will realise value for Sirius whilst significantly increasing the opportunity to drive shareholder returns into the future.
Some commentators are alluding to a possible slowdown in the Germany economy; however, Sirius is well positioned to continue
generating growth due to the wide range of products offered, well diversified tenant base and very significant value-add potential
that remains within its portfolio based on a combination of the continued roll out of our capex investment programmes and yield at
which the portfolio is currently valued. The Company continues to maintain discipline in its investing and has increased the number
of opportunities it analyses in order to identify acquisition opportunities which can generate attractive returns.
The Company's focus remains on delivering attractive and consistent risk adjusted returns by way of active asset management
throughout the property cycle. With acquisition firepower available, significant vacancy to develop, good reversion potential within
the existing portfolio and the new venture to look forward to the Company is well positioned for the new financial year and beyond.
Alistair Marks
Chief Financial Officer
31 May 2019
Consolidated statement of comprehensive income
for the year ended 31 March 2019
(Re-presented*)
Year ended Year ended
31 March 2019 31 March 2018
Notes EUR000 EUR000
Revenue 5 140,063 123,650
Direct costs 6 (64,299) (60,578)
Net operating income 75,764 63,072
Gain on revaluation of investment properties 13 99,887 63,452
Gain/(loss) on disposal of properties 6 611 (2,502)
Administrative expenses 6 (20,931) (24,184)
Operating profit 155,331 99,838
Finance income 9 75 13
Finance expense 9 (9,199) (10,246)
Change in fair value of derivative financial instruments 9 (1,495) 43
Net finance costs (10,619) (10,190)
Profit before tax 144,712 89,648
Taxation 10 (15,990) (8,285)
Profit and total comprehensive income for the year after tax 128,722 81,363
Profit and total comprehensive income attributable to:
Owners of the Company 128,657 81,272
Non-controlling interest 65 91
Total comprehensive income for the year after tax 128,722 81,363
Earnings per share
Basic earnings per share 11 12.78c 8.89c
Diluted earnings per share 11 12.72c 8.65c
Basic EPRA earnings per share 11 4.47c 3.04c
Diluted EPRA earnings per share 11 4.45c 2.96c
Headline earnings per share 11 4.33c 3.04c
Diluted headline earnings per share 11 4.31c 2.95c
* See note 2(b).
All operations of the Group have been classified as continuing.
Consolidated statement of financial position
as at 31 March 2019
(Re-presented*)
31 March 2019 31 March 2018
Notes EUR000 EUR000
Non-current assets
Investment properties 13 972,868 913,843
Plant and equipment 15 3,438 3,126
Goodwill 16 3,738 3,738
Other non-current assets 2(b) 1,813 1,750
Deferred tax assets 10 - 811
Total non-current assets 981,857 923,268
Current assets
Trade and other receivables 17 10,828 43,313
Derivative financial instruments 250 -
Cash and cash equivalents 18 36,342 79,605
Total current assets 47,420 122,918
Assets held for sale 14 164,635 17,325
Total assets 1,193,912 1,063,511
Current liabilities
Trade and other payables 19 (40,755) (40,972)
Interest-bearing loans and borrowings 20 (7,408) (7,844)
Current tax liabilities (579) (3,045)
Derivative financial instruments (346) (6)
Total current liabilities (49,088) (51,867)
Non-current liabilities
Interest-bearing loans and borrowings 20 (324,053) (359,234)
Derivative financial instruments (806) (292)
Deferred tax liabilities 10 (30,878) (26,485)
Total non-current liabilities (355,737) (386,011)
Liabilities directly associated with assets held for sale 14 (63,042) -
Total liabilities (467,867) (437,878)
Net assets 726,045 625,633
Equity
Issued share capital 23 - -
Other distributable reserve 24 491,010 519,320
Retained earnings 234,798 106,141
Total equity attributable to the owners of the Company 725,808 625,461
Non-controlling interest 237 172
Total equity 726,045 625,633
* See note 2(b).
The financial statements were approved by the Board of Directors on 31 May 2019 and were signed on its behalf by:
Danny Kitchen
Chairman
Company number: 46442
Consolidated statement of changes in equity
for the year ended 31 March 2019
Total equity
attributable to
Issued Other the owners of Non-
share distributable Retained the controlling Total
capital reserve earnings Company interest equity
Notes EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
As at 31 March 2017 - 470,318 24,869 495,187 81 495,268
Shares issued, net of costs - 63,352 - 63,352 - 63,352
Share-based payment transactions 8 - 3,674 - 3,674 - 3,674
Dividends paid - (18,024) - (18,024) - (18,024)
Total comprehensive income for the year - - 81,272 81,272 91 81,363
As at 31 March 2018 - 519,320 106,141 625,461 172 625,633
Shares issued - - - - - -
Transaction costs relating to share issues - (30) - (30) - (30)
Share-based payment transactions 8 - (4,516) - (4,516) - (4,516)
Dividends paid 25 - (23,764) - (23,764) - (23,764)
Total comprehensive income for the year - - 128,657 128,657 65 128,722
As at 31 March 2019 - 491,010 234,798 725,808 237 726,045
Consolidated statement of cash flows
for the year ended 31 March 2019
Year ended Year ended
31 March 31 March
2019 2018
Notes EUR000 EUR000
Operating activities
Profit for the year after tax 128,722 81,363
Taxation 10 15,990 8,285
(Gain)/loss on sale of properties 6 (611) 2,502
Share-based payments 6 232 4,310
Gain on revaluation of investment properties 13 (99,887) (63,452)
Change in fair value of derivative financial instruments 1,495 (43)
Depreciation 6 1,373 1,086
Finance income 9 (75) (13)
Finance expense 9 9,199 8,898
Exit fees/prepayment of financing penalties 9 - 1,348
Changes in working capital
Increase in trade and other receivables (3,791) (2,730)
Increase in trade and other payables 2,260 2,271
Taxation paid (1,806) (756)
Cash flows from operating activities 53,101 43,069
Investing activities
Purchase of investment properties (67,078) (121,252)
Prepayments relating to new acquisitions 17 (410) (34,585)
Capital expenditure (26,130) (19,104)
Purchase of plant and equipment (1,690) (1,649)
Proceeds on disposal of properties (including held for sale)* 27,425 102,510
Interest received 9 75 13
Cash flows used in investing activities (67,808) (74,067)
Financing activities
Issue of shares net of costs (30) 63,352
Payment relating to exercise of share options 6 (4,748) -
Dividends paid 25 (23,764) (18,024)
Proceeds from loans 20 22,114 78,930
Repayment of loans (9,062) (53,551)
Exit fees/prepayment of financing penalties - (1,348)
Finance charges paid (9,126) (7,451)
Cash flows (used in)/from financing activities (24,616) 61,908
(Decrease)/increase in cash and cash equivalents (39,323) 30,910
Cash and cash equivalents at the beginning of the year 79,605 48,695
Cash and cash equivalents at the end of the year 18 40,282 79,605
* Includes EUR17,325,000 (2018: EUR96,000,000) proceeds from sale of assets held for sale.
Notes to the financial statements
for the year ended 31 March 2019
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 Main Markets 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 year ended 31 March 2019.
The principal activity of the Group is the investment in, and development of, commercial property to provide conventional and
flexible workspace in Germany.
2. Significant accounting policies
(a) Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis, except for investment properties, investment
properties held for sale and derivative financial instruments, which have been measured at fair value. The consolidated financial
information is presented in euros and all values are rounded to the nearest thousand (EUR000), except where otherwise indicated.
The Company has chosen to prepare its annual consolidated financial statements in accordance with International Financial
Reporting Standards as issued by the IASB ("IFRS") as a result of the primary listing on the JSE. The Company previously prepared
consolidated financial information in accordance with IFRS as adopted by the EU ("IFRS EU"). Accordingly, the consolidated financial
information as at 31 March 2019 and the comparative period have been prepared in accordance with IFRS as issued by the IASB.
There were no noted differences between IFRS as issued by the IASB and IFRS as adopted by the EU that are relevant to the Group.
Therefore, no changes to previously reported financial information were made as a result of this change in the basis of preparation
of financial statements.
As at 31 March 2019 the Group's consolidated financial statements reflect consistent accounting policies and methods of computation
used in previous financial year except for the changes in the application of accounting policies as described in note 2(b).
(b) Changes in accounting policies and other re-presentations
For the period beginning on 1 April 2018 the Group had to adopt IFRS 9 "Financial Instruments" (IFRS 9) and IFRS 15 "Revenue
from Contracts with Customers" (IFRS 15) for the first time. The adoption of these new standards and other amendments to
existing standards and interpretations effective from 1 April 2018 did not materially impact the set of consolidated financial
statements for the year ended 31 March 2019 and no retrospective adjustments were made.
IFRS 15 "Revenue from Contracts with Customers"
IFRS 15 replaced the existing regulations for the recognition of revenue in accordance with IAS 18 "Revenue" and IAS 11
"Construction Contracts". Consequently, revenues are recognised when the customer obtains control over the agreed distinct
goods and services and can derive benefits from these. IFRS 15 does not apply to rental income, which makes up approximately
60% of total revenue of the Group, but does apply to other revenue streams, namely service charge income and proceeds on
disposal of investment property. The first-time application of the standard using modified retrospective approach has not had a
material impact neither on the consolidated statement of comprehensive income nor on the consolidated statement of financial
position or required disclosures using modified retrospective approach. Please refer to note 2(h) for the revised accounting policies
and note 3 for details on judgements.
IFRS 9 "Financial Instruments"
IFRS 9 provides a standardised approach for classification, measurement and derecognition of financial assets and liabilities, and
introduces new rules for hedge accounting and a new impairment model for financial assets. The Group applied IFRS 9
retrospectively and did not elect to restate the comparative information. The adoption of IFRS 9 has changed the Group`s
accounting policy for impairment losses for financial assets by replacing IAS 39`s incurred loss approach with a forward-looking
expected credit loss (ECL) approach. IFRS 9 requires the Group to recognise an allowance for ECLs for all debt instruments not
held at fair value through profit or loss and for contract assets. There were no material changes identified from adoption of the
standard. Please refer to note 2(q), 2(u), 2(v) and 2(y) for the revised policies.
As part of the Group's review of the impact of adopting the amendments to IFRS the Group has taken the opportunity to revisit its
accounting policies. As a result, the following adjustments were recorded to represent the financial statements:
Revenue and direct costs
The Group had previously a) incorrectly netted service charge income received from tenants against the direct costs to which the
income relates and b) incorrectly netted rental and other income from managed properties against costs relating to managed
properties. The Group has reassessed these treatments and concluded that it operates as a principal in both cases and that the
amounts should be recognised gross. The impact of this re-presentation is to increase revenue and direct costs by EUR51,511,000 in
the year to 31 March 2018.
There is no impact on basic, diluted, headline or adjusted earnings per share. There was no impact on 31 March 2018 and 1 April
2017 in regard to the balance sheet, net assets and net profits. Accordingly, a third balance sheet is not presented.
Assets held for sale
The Group had previously presented assets held for sale within current assets. In accordance with IFRS 5 and industry practice,
this has been re-presented separately from other assets in the statement of financial position. The impact of this re-presentation is
to decrease current assets by EUR17,325,000 at 31 March 2018 (1 April 2017: EUR96,000,000).
There is no impact on basic, diluted, headline or adjusted earnings per share. There was no impact on 31 March 2018 and 1 April
2017 in regard to net assets and net profits, accordingly a third balance sheet is not presented.
Other non-current assets
The Group has reallocated non-current guarantees/deposits amounting to EUR1,750,000 at 31 March 2018 from other receivables to
other non-current assets which were previously incorrectly accounted for within current assets (1 April 2017: EUR25,000).
There is no impact on basic, diluted, headline or adjusted earnings per share. There was no impact on 31 March 2018 and 1 April
2017 in regard to net assets and net profits, accordingly a third balance sheet is not presented.
(c) Statement of compliance
The consolidated financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the
United Kingdom Financial Conduct Authority, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the listing requirements
of the JSE Limited, IFRS and Companies (Guernsey) Law. The consolidated financial statements have been prepared on the same
basis of the accounting policies set out in the Group's annual financial statements for the year ended 31 March 2018 except for the
changes in accounting policies as shown in note 2(b). The Group's annual financial statements refer to new standards and
interpretations, none of which had a material impact on the financial statements (see note 2(a)). All forward-looking information is
the responsibility of the board of directors and has not been reviewed or reported on by the group's auditors.
(d) Going concern
Having reviewed the Group's current and future trading, cash flow and covenant forecasts, together with sensitivities and mitigating
factors and the available facilities, the Board has a reasonable expectation that the Group has adequate resources to continue in
operational existence for at least twelve months from the date these consolidated financial statements are approved. At 31 March 2019,
the value of current liabilities exceeded the current assets by EUR1.7m. Due to the availability of undrawn bank facilities, which
more than exceeds the net current liability position and the ownership of unencumbered assets there is no impact on our ability to
continue as a going concern. Accordingly, the Board continued to adopt the going concern basis in preparing the historical financial
information.
(e) Basis of consolidation
The consolidated financial information comprises the financial information of the Group as at 31 March 2019. The financial
information of the subsidiaries is prepared for the same reporting period as the Company, using consistent accounting policies.
All intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions are
eliminated in preparing the consolidated financial statements.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to
be consolidated until the date that such control ceases.
Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately
in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position,
separately from the Company's shareholders' equity.
(f) Acquisitions
Investment property acquisitions that are not accounted for as business combinations under IFRS 3 "Business Combinations" are
treated with as acquisitions of investment property assets. Every transaction is assessed as either an asset acquisition or a
business combination. During the period it was assessed that all investment properties purchased in the period should be
accounted for as asset acquisitions due to the fact that the Group implements its own internal process and the key elements of the
infrastructure of the business were not purchased.
(g) Foreign currency translation
The consolidated financial information is presented in euros, which is the functional and presentational currency of all members of
the Group.
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the
exchange rate ruling at the statement of financial position date. All differences are taken to the statement of comprehensive
income.
(h) Revenue recognition
Rental income
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another
systematic basis is more representative of the time pattern in which the benefit derived from the leased asset is diminished. Fixed
or determinable rental increases, which can take the form of actual amounts or agreed percentages, are recognised on a straight-
line basis over the term of material leases. If the increases are related to a price index to cover inflationary cost increases then the
policy is not to spread the amount but to recognise them when the increase takes place.
The value of rent free periods and all similar lease incentives is spread on a straight-line basis over the term of material leases only.
Where there is a reasonable expectation that the tenant will exercise break options, the value of rent free periods and all similar
lease incentives is booked up to the break date.
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.
The Group mainly generates revenue from contracts with customers for services rendered to tenants including management
charges and other expenses recoverable from tenants ('service charge income'). These services are specified in the lease
agreements and separately invoiced.
The individual activities vary significantly throughout the day and from day to day however, the nature of the overall promise of
providing property management service remains the same each day. Accordingly, the service performed each day is distinct and
substantially the same. These services represent a series of daily services that are individually satisfied over time because the
tenants simultaneously receive and consume the benefits provided by the Group. The actual service provided during each reporting
period is determined using cost incurred as the input method.
Transaction price are regularly updated and are estimated at the beginning of each year based on previous costs and estimated
spend. Service charge budgets are prepared carefully to make sure that they are realistic and reasonable. Variable consideration is
only included in the transaction price to the extent it is highly probable that a significant reversal in the amount of cumulative
revenue recognised will not occur. The variable consideration is allocated to each distinct period of service (i.e., each day) as it
meets the variable consideration allocation exception criteria.
The Group acts as a principal in relation to these services, and records revenue on a gross basis, as it typically controls the
specified goods or services before transferring them to tenants.
Where amounts invoiced to tenants are greater than the revenue recognised at the period end date, the difference is recognised as
unearned revenue when the group has unconditional right to consideration, even if the payments are non-refundable. Where
amounts invoiced are less than the revenue recognised at the period end date, the difference is recognised as contract assets or,
when the group has a present right to payment, as receivables albeit unbilled.
Rental and other income from managed properties
As the Group derives income and incurs expenses relating to properties it manages but does not own, such income and expense is
disclosed separately within revenue and direct costs. Income relating to managed properties is accounted for according to revenue
recognitions accounting policies set out above.
Interest income
Interest income is recognised as it accrues (using the effective interest method, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial instrument).
(i) Leases
Group as lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as
operating leases.
(j) Income tax
Current income tax
Current income tax assets and liabilities are measured at the reporting date at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted by the reporting date.
Certain subsidiaries may be subject to foreign taxes in respect of foreign sources of income. Sirius Real Estate Limited is UK
resident for tax purposes.
Deferred income tax
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements, with the following exceptions:
- where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
- in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future; and
- deferred tax assets are only recognised to the extent that it is foreseeable that taxable profit will be available against which the
deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply in the
year when the related asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
(k) Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax except:
- where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case
the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
- receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the statement of financial position.
(l) Investment properties
Investment properties are properties owned by the Group which are held for long-term rental income, capital appreciation or both.
Investment properties are initially recognised at cost, including transaction costs when the control of the property is transferred.
Where recognition criteria are met the carrying amount includes subsequent costs to add to or replace part of an investment
property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the
reporting date.
Investment properties are derecognised when control of the asset is transferred to a third party.
Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the statement of
comprehensive income in the period in which they arise.
The fair value of the Group's investment properties at 31 March 2019 has been arrived at on the basis of a valuation carried out at
that date by Cushman & Wakefield LLP (2018: Cushman & Wakefield LLP), an independent valuer on the basis of highest and best
use. The valuations are in accordance with standards complying with the Royal Institute of Chartered Surveyors' ("RICS's")
approval and the conceptual framework that has been set by the International Valuation Standards Committee.
The valuation is based upon assumptions including future rental income, anticipated non-recoverable and maintenance costs,
expected capital expenditure and an appropriate discount rate. The properties are valued on the basis of a discounted cash flow
model using a range of 10-14 years 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 the measurement
period. At the end of the period in which the cash flow is modelled, a determining residual value (exit scenario) is calculated. A
capitalisation rate is applied to the more uncertain future income, discounted to present value. Each property is visited by the
external valuer at least once every two years.
In the prior year, the directors made discretionary impairment (devaluation) of non-core assets due to strong evidence existing to
support an adjustment. In such circumstances the Audit Committee performed a review and satisfied itself the impairment could be
fully substantiated and appropriately supported before a write-down was recognised in the Company's books and records. No such
adjustment has been recorded in the current year.
(m) Disposals of investment property
Investment property disposals are recognised when control of the property transfers to the buyer, which typically occurs on the date
of completion. Profit or loss arising on disposal of investment properties is calculated by reference to the most recent carrying value
of the asset adjusted for subsequent capital expenditure.
(n) Assets held for sale and disposal groups
(i) Investment properties held for sale
Investment properties held for sale are separately disclosed at the asset's fair value. In order for an investment property held for
sale to be recognised, the following conditions must be met:
- the asset must be available for immediate sale in its present condition and location;
- the asset is being actively marketed;
- the asset's sale is expected to be completed within twelve months of classification as held for sale;
- there must be no expectation that the plan for selling the asset will be withdrawn or changed significantly; and
- the successful sale of the asset must be highly probable.
(ii) Disposal groups
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale
are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly
attributable to the disposal of a disposal group, excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the disposal group is
available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that
significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the
plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately in the statement of financial position.
Additional disclosures are provided in note 14.
(o) Plant and equipment
Recognition and measurement
Items of plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Depreciation
Where parts of an item of plant and equipment have different useful lives, they are accounted for as separate items of plant and
equipment.
Depreciation is charged in the statement of comprehensive income on a straight-line basis over the estimated useful lives of each
part of an item of the fixed assets. The estimated useful lives are as follows:
Plant and equipment four to ten years
Fixtures and fittings four years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
(p) Intangible assets
The Group recognises only acquired intangible assets. These intangibles are valued at cost.
Intangible assets with a definite useful life are amortized on a straight-line basis over their respective useful lives. Their useful lives
are between three and five years. Any amortization of these assets is recognized as such under administrative expenses in the
consolidated statement of comprehensive income.
Intangible assets with an indefinite useful life, particularly goodwill, are not amortized.
Goodwill arising on consolidation represents the excess of the cost of the purchase consideration over the Group's interest in the
fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition.
Goodwill is initially recognised at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is
tested annually for impairment, or more frequently when there is an indication that the business to which the goodwill applies may
be impaired.
(q) Trade and other receivables
Rent and service charge receivables and any contract assets do not contain significant financing component and are measured at
the transaction price. Other receivables are initially measured at fair value plus transaction costs, using the expected credit loss
model according to IFRS 9. The Group applies the simplified impairment model of IFRS 9 in order to determine expected credit
losses in trade and other receivables, including lease incentives.
The Group assesses on a forward-looking basis the expected credit losses associated with its trade and other receivables. A
provision for impairment is made for the lifetime expected credit losses on initial recognition of the receivable. If collection is
expected in more than one year, the balance is presented within non-current assets.
In determining the expected credit losses the Group takes into account any recent payment behaviours and future expectations of
likely default events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or expected
insolvencies and market expectations and trends in the wider macro-economic environment in which our customers operate.
Trade and other receivables are written off once all avenues to recover the balances are exhausted and the lease has ended.
(r) Treasury Shares
Own equity instruments which are reacquired ("Treasury Shares") are deducted from equity. No gain or loss is recognised in the
statement of comprehensive income on the purchase, sale, issue or cancellation of the Group's equity instruments.
(s) Share-based payments
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of
awards that meet the related service and non-market performance conditions at the vesting date.
(t) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits and other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to a known amount of cash and are subject to an
insignificant risk of change in value.
(u) Bank borrowings
Interest-bearing bank loans and borrowings are initially recorded at fair value net of directly attributable transaction costs.
Subsequent to initial recognition, interest-bearing loans and borrowings are measured at amortised cost using the effective interest
rate method.
When debt refinancing exercises are carried out, existing liabilities will be treated as being extinguished when the new liability is
substantially different from the existing liability. In making this assessment, the Group will consider the transaction as a whole,
taking into account both qualitative and quantitative characteristics in order to make the assessment.
(v) Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest
rate method.
(w) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
(x) Dividends
Dividend distributions to the Company's shareholders are recognised as a liability in the consolidated financial information in the
period in which the dividends are approved by the Company's Board. The final dividend relating to the year ended 31 March 2019
will be approved and recognised in the financial year ending 31 March 2020.
(y) Impairment excluding investment properties
(i) Financial assets
A financial asset (excluding financial assets at fair value through profit and loss) is assessed at each reporting date to determine
whether there is any impairment. The Group recognises an allowance for expected credit losses (ECLs) for all receivables and
contract assets held by the Group. ECLs are based on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are
integral to the contractual terms.
For rent and other trade receivables and any contract assets, the Group applies a simplified approach in calculating ECLs. The
Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date
(i.e., a loss allowance for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default).
In determining the ECLs the Group takes into account any recent payment behaviours and future expectations of likely default events
(i.e. not making payment on the due date) based on individual customer credit ratings, actual or expected insolvency filings or
company voluntary arrangements and market expectations and trends in the wider macro-economic environment in which our
customers operate.
Impairment losses are recognised in profit or loss of the statement of comprehensive income. Trade and other receivables are
written off once all avenues to recover the balances are exhausted and the lease has ended
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets, other than investment property and deferred tax assets, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").
An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss of the statement of comprehensive income. Impairment losses
recognised in profit or loss in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis.
(z) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification, except
for deferred tax assets and liabilities which are classified as non-current assets and liabilities. An asset is current when it is:
- Expected to be realised or intended to be sold or consumed in the normal operating cycle,
- held primarily for the purpose of trading,
- expected to be realised within twelve months after the reporting period; or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the
reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in the normal operating cycle,
- it is held primarily for the purpose of trading,
- it is due to be settled within twelve months after the reporting period; or
- there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current.
(aa) Standards and interpretations in issue and not yet effective
IFRS 16
IFRS 16 replaces existing leases guidance, including IAS 17 "Leases", IFRIC 4 "Determining Whether an Arrangement Contains a
Lease", SIC-15" Operating Leases - Incentives" and SIC-27 "Evaluating the Substance of Transactions Involving the Legal Form of
a Lease".
The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for entities that apply
IFRS 15 at or before the date of initial application of IFRS 16.
IFRS 16 introduces a single, on balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset
representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are
recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current
standard - i.e. lessors continue to classify leases as finance or operating leases.
The most significant impact identified is that the Group will recognise new assets and liabilities for its operating leases of office
buildings and leases for space relating to operating management contracts.
As at 31 March 2019, the Group's future minimum lease payments under non-cancellable operating leases are disclosed under
note 27.
In addition, the nature of expenses related to those leases will now change as IFRS 16 replaces the straight-line operating lease
expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities.
As a lessee, the Group can either apply the standard using a:
- retrospective approach; or
- modified retrospective approach with optional practical expedients.
The Group plans to apply IFRS 16 initially on 1 April 2019, using the modified retrospective approach, and will apply the election
consistently to all of its leases.
The Group has completed its assessment of the potential impact on its consolidated financial statements. The expected impact of
the first-time adoption of IFRS 16 as of 1 April 2019 is approximately EUR24,000,000 which will be shown as a right of use of assets
and a corresponding lease liability.
In addition, the IASB has published "Annual Improvements to IFRS Standards 2015-2017 Cycle" in December 2017 and has issued
IFRIC 23 in June 2017, which will be applicable to financial years after 1 January 2019. Amendments to IFRS 3 has been published
in October 2018 which will be applicable to financial years after 1 January 2020. The Group is not expecting material impact on its
reporting methodology coming from those changes.
(ab) 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 11 to the financial statements includes a
reconciliation of basic and diluted earnings to EPRA earnings.
The Directors are required, as part of the JSE Listing Requirements, to disclose headline earnings; accordingly, headline earnings
are calculated using basic earnings adjusted for revaluation gain net of related tax and gain/loss on sale of properties net of related
tax. Note 11 to the financial statements includes a reconciliation between IFRS and headline earnings.
The Directors have chosen to disclose adjusted earnings in order to provide an alternative indication of the Group's underlying
business performance; accordingly, it excludes the effect of adjusting items net of related tax. Note 11 to the financial statements
includes a reconciliation of adjusting items included within adjusted earnings, with those adjusting items stated within administrative
expenses in note 6.
The Directors have chosen to disclose adjusted profit before tax and funds from operations in order to provide an alternative
indication of the Group's underlying business performance and to facilitate the calculation of its dividend pool; a reconciliation
between profit before tax and funds from operations is included within note 25 to the financial statements. Within adjusted profit
before tax are adjusting items as described above gross of related tax.
Further details on non-IFRS measures can be found in the business analysis section of this document.
3. Significant accounting judgements, estimates and assumptions
Judgements
In the process of applying the Group's accounting policies, which are described in note 2, the Directors have made the following
judgements that have the most significant effect on the amounts recognised in the financial information:
Operating lease commitments - Group as lessor
The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it
retains all the significant risks and rewards of ownership of these properties and therefore accounts for them as operating leases.
Acquisition and disposal of properties
Property transactions can be complex in nature and material to the financial statements. To determine when an acquisition or
disposal should be recognised, management consider whether the Group assumes or relinquishes control of the property, and the
point at which this is obtained or relinquished. Consideration is given to the terms of the acquisition or disposal contracts and any
conditions that must be satisfied before the contract is fulfilled. In the case of an acquisition, management must also consider
whether the transaction represents an asset acquisition or business combination.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below:
Valuation of investment properties (including those recognized within assets held for sale or a disposal group)
The fair value of the Group's investment properties was determined by Cushman & Wakefield LLP (2018: Cushman & Wakefield
LLP), an independent valuer. After adjusting investment properties for lease incentive accounting, the book value of investment
properties is shown as EUR972.9 million (31 March 2018: EUR913.8 million) as disclosed in note 13.
The Cushman & Wakefield LLP valuation is based upon assumptions including future rental income, anticipated maintenance costs
and an appropriate discount rate. The properties are valued on the basis of a ten to fourteen year discounted cash flow model
supported by comparable evidence. The discounted cash flow calculation is a valuation of rental income considering non-
recoverable costs and applying a discount rate for the current income risk over a ten to fourteen year period. After ten to fourteen
years, a determining residual value (exit scenario) is calculated. A capitalisation rate is applied to the more uncertain future income,
discounted to a present value.
As a result of the level of judgement used in arriving at the market valuations, the amounts which may ultimately be realised in
respect of any given property may differ from the valuations shown on the statement of financial position.
Assessment of uncertain tax positions
In the ordinary course of business, management make judgements and estimates in relation to the tax treatment of certain
transactions in advance of the ultimate tax determination being certain. Where the amount of tax payable or recoverable is
uncertain management use judgement in recording a corresponding payable or receivable.
Service charge
Service charge expenses are based on actual costs incurred and invoiced together with an estimate of costs to be invoiced in
future periods. The estimates are based on expected consumption rates, historical trends and take into account market conditions
at the time of recording.
Service charge income is based on service charge expense and takes into account recovery rates which are largely derived from
estimated occupancy levels.
4. 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 income is derived from operations in Germany. 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.
5. Revenue
(Re-presented*)
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Rental and other income from investment properties 84,414 71,782
Service charge income 44,216 41,561
Rental, service charge and other income from managed properties 11,433 10,307
Total revenue 140,063 123,650
* See note 2(b).
Other income relates primarily to income associated with conferencing and catering of EUR1,730,000 (2018: EUR1,571,000).
6. Operating profit
The following items have been charged in arriving at operating profit:
Direct costs
(Re-presented*)
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Service charge costs 51,250 48,729
Costs relating to managed properties 10,779 9,950
Non-recoverable maintenance 2,270 1,899
Direct costs 64,299 60,578
Gain on disposal of properties
Included within gain on disposal of properties of EUR611,000 (2018: loss of EUR2,502,000) are total proceeds of EUR27,425,000
(2018: EUR102,510,000) and property and professional costs of EUR26,814,000 (2018: EUR106,404,000).
Administrative expenses
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Audit fee 389 350
Legal and professional fees 3,373 2,431
Other administration costs 1,881 1,278
LTIP and SIP 232 4,310
Employee costs 11,167 11,069
Director fees and expenses 447 350
Depreciation 1,373 1,086
Marketing 1,860 1,745
Selling costs relating to assets held for sale - 52
Non-recurring items 209 1,513
Administrative expenses 20,931 24,184
The following services have been provided by the Group`s auditor:
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Audit fees:
Audit of consolidated financial statements 273 266
Audit of subsidiary undertakings 58 50
Non-audit fees:
Other assurance services 58 34
Total fees 389 350
Non-recurring items relate primarily to costs associated with the new venture with AXA IM - Real Assets which is explained in more
detail in note 14 (2018: potential legal claim and additional Main Market listing costs).
Employee costs as stated above relate to costs which are not recovered through service charge.
7. Employee costs and numbers
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Wages and salaries 13,986 16,355
Social security costs 2,543 2,927
Pension 234 204
Other employment costs 51 95
16,814 19,581
The wages and salaries costs for the year ended 31 March 2019 include expenses of EUR232,000 (31 March 2018: EUR3,541,000)
relating to the granting or award of shares under LTIPs (see note 8) and nil costs for the year ended 31 March 2019 relating to the
previous LTIP award. 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 year was 241 (31 March 2018: 232),
expressed in full-time equivalents. In addition, the Board of Directors consists of four Non-executive Directors (31 March 2018: four)
and two Executive Directors (31 March 2018: two) as at 31 March 2019.
8. Employee schemes
Equity-settled share-based payments
2015 LTIP
The 2015 LTIP for the benefit of the Executive Directors and the Senior Management Team was approved in October 2015. The
fair value determined at the grant date was expensed on a straight-line basis over the vesting and holding period, based on the
Company's estimate of the shares that would eventually vest and adjusted for the effect of non-market-based vesting conditions.
Under the LTIP, the awards were granted in the form of whole shares at no cost to the participants. Shares vested after the three
year performance period and include a holding period of twelve months after vesting. The performance conditions used to
determine the vesting of the award were based on net asset value and total shareholder return allowing vesting of 0% to a
maximum of 125%. As a result, a maximum of 25,150,000 share awards were granted, subject to performance criteria, under the
scheme in December 2015. A total of 1,300,000 shares were forfeited during the performance period by a participant who left the Group.
The 2015 LTIP vested on 2 July 2018 based on performance conditions assessed over the three years to 31 March 2018, and a
separate assessment based on total shareholder return assessed up to the 20th business day after the announcement of the results
for the year ended 31 March 2018. Vesting was at the maximum level for all participants resulting in the exercising of 17,356,106
shares in the year including 432,106 that were surrendered by the scheme participants and re-allocated to employees of the Group
to make them shareholders, and the forfeiting of 6,493,894 relating to partial settlement of certain participants' tax liabilities arising
in respect of the vesting.
As the fair value determined at the grant date was expensed on a straight-line basis over the vesting period an expense of EURnil
(31 March 2018: EUR3,541,000) was recognised in the statement of comprehensive income to 31 March 2019.
Movements in the number of shares outstanding and their weighted average exercise prices were as follows:
Year ended Year ended
31 March 2019 31 March 2018
Weighted Weighted
average average
exercise exercise
Number of price Number of price
shares EUR shares EUR
Balance outstanding as at the beginning of the year (nil
exercisable) 23,850,000 - 23,850,000 -
Maximum granted during the year - - - -
Shares surrendered to cover employee tax obligations (6,493,894) - - -
Exercised during the year (17,356,106) - - -
Balance outstanding as at the end of the year - - 23,850,000 -
The fair value per share was determined using the Monte-Carlo model, with the following assumptions used in the calculation as at
grant date:
Weighted average share price - EUR 0.52
Weighted average exercise price - EUR -
Expected volatility - % 20
Expected life - years 2.48
Risk free rate based on European treasury bonds' rate of return - % (0.11)
Expected dividend yield - % 3.41
Assumptions considered in the model included: expected volatility of the Company's share price, as determined by calculating the
historical volatility of the Company's share price over the historical 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; expected life of the awards; risk free rates; and correlation between comparators.
2018 LTIP
A new LTIP for the benefit of the Executive Directors and the Senior Management Team was approved on 5 December 2018.
Awards granted under the 2018 LTIP are in the form of nil cost options which vest after the three year performance period followed
by a 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.
4,000,000 ordinary share awards and 700,000 outperformance share awards were granted under the scheme on 15 January 2019
with a total charge for the awards of EUR2,463,000 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.
An expense of EUR232,000 was recognised in the consolidated statement of comprehensive income to 31 March 2019.
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 1/3 ordinary
award/ award
outperformance
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 bonds rate of return - % (0.63) p.a. (0.63) p.a.
Expected outcome of performance conditions - % 100/67 44.7
Fair value per share - EUR 0.66 0.295
The weighted average fair value of a share granted under the ordinary award in the year was 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.
2017 SIP
A share incentive plan ("SIP") for the benefit of senior employees of the Company was approved in May 2017. 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 vested after a one 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 and allowed vesting of 100% or 0%. As a result, under the scheme in June 2017 a maximum of 1,065,000 shares
were granted, subject to performance criteria, and an expense including related costs of EURnil (31 March 2018: EUR769,000)
was recognised in the consolidated statement of comprehensive income to 31 March 2019.
Employee benefit scheme
A reconciliation of share-based payments and their impact on the consolidated statement of changes in equity is as follows:
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Charge relating to MSP - 326
Charge relating to 2015 LTIP - 2,617
Charge relating to 2018 LTIP 232 -
Charge relating to SIP - 731
Value of shares withheld to settle employee tax obligations (4,748) -
Share-based payment transactions as per consolidated statement of changes in equity (4,516) 3,674
9. Finance income, finance expense and change in fair value of derivative financial instruments
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Bank interest income 75 13
Finance income 75 13
Bank loan interest expense (7,643) (6,721)
Bank charges (185) (145)
Amortisation of capitalised finance costs (1,371) (1,173)
Refinancing costs, exit fees and prepayment penalties - (2,207)
Finance expense (9,199) (10,246)
Change in fair value of derivative financial instruments (1,495) 43
Net finance expense (10,619) (10,190)
The refinancing costs on derecognition of loans for the year ended 31 March 2018 of EUR2,207,000 related to the costs associated
with the part repayment of tranche 1 of the Berlin Hyp AG/Deutsche Pfandbriefbank AG facility and full repayment of tranche 2 of
the Berlin Hyp AG/Deutsche Pfandbriefbank AG facility following the sales of the Dusseldorf and Munich Rupert Mayer Strasse
assets. No derecognition of loans has occurred in the current financial year.
The change in fair value of derivative financial instruments in amount of EUR1,495,000 (2018: EUR43,000) reflects the change in the mark
to market valuation of these financial instruments.
10. Taxation
Consolidated statement of comprehensive income
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Current income tax
Current income tax charge (523) (604)
Current income tax charge relating to disposals of investment properties (170) (1,921)
Accrual relating to tax treatment of swap break 151 (839)
Adjustments in respect of prior periods 501 -
Total current income tax (41) (3,364)
Deferred tax
Relating to origination and reversal of temporary differences (15,138) (5,492)
Relating to LTIP charge for the year (811) 571
Total deferred tax (15,949) (4,921)
Income tax charge reported in the statement of comprehensive income (15,990) (8,285)
The current income tax charge of EUR41,000 (31 March 2018: EUR3,364,000) reflects a release of tax accruals for prior years as well as
the tax charge for the year. The effective income tax rate for the period differs from the standard rate of corporation tax in Germany
of 15.825% (2018: 15.825%). The differences are explained below:
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Profit before tax 144,712 89,648
Profit before tax multiplied by the rate of corporation tax in Germany of 15.825% (2018:
15.825%) 22,901 14,187
Effects of:
Deductible interest on internal financing (6,197) (5,573)
Non-deductible expenses (1,728) 835
Tax losses utilised (882) (4,726)
Property valuation movements due to differences in accounting treatments 1,796 3,270
Adjustments in respect of prior periods (652) 839
Other 752 (547)
Total income tax charge in the statement of comprehensive income 15,990 8,285
Deferred income tax liability
31 March 2019 31 March 2018
EUR000 EUR000
Opening balance (26,485) (20,993)
Release due to disposals 261 4,883
Taxes on the revaluation of investment properties (15,399) (10,375)
Transferred to liabilities directly associated with assets held for sale 10,745 -
Balance as at year end (30,878) (26,485)
Deferred income tax asset
31 March 2019 31 March 2018
EUR000 EUR000
Opening balance 811 240
Relating to LTIP charge for the year (811) 571
Balance as at year end - 811
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 EUR333,078,000 (2018: EUR261,763,000) that are available for offset against future profits of its
subsidiaries in which the losses arose under the restrictions of the minimum taxation rule.
11. Earnings per share
The calculations of the basic, EPRA, diluted, headline and adjusted earnings per share are based on the following data:
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Earnings attributable to the owners of the Company
Basic earnings 128,657 81,272
Diluted earnings 128,657 81,272
EPRA earnings 44,995 27,783
Diluted EPRA earnings 44,995 27,783
Headline earnings 43,554 27,755
Diluted headline earnings 43,554 27,755
Adjusted
Basic earnings 128,657 81,272
Deduct revaluation surplus (99,887) (63,452)
Add loss/deduct gain on sale of properties (611) 2,502
Tax in relation to the above 15,362 7,433
NCI relating to revaluation, net of related tax 32 -
NCI relating to gain on sale of properties, net of related tax 1 -
Headline earnings after tax 43,554 27,755
Add/(deduct) change in fair value of derivative financial instruments, net of related tax and NCI 1,441 (63)
Add adjusting items, net of related tax and NCI (1) 1,101 8,349
Adjusted earnings after tax 46,096 36,041
Number of shares
Weighted average number of ordinary shares for the purpose of basic, headline, adjusted and
basic EPRA earnings per share 1,006,966,788 914,479,339
Weighted average number of ordinary shares for the purpose of diluted earnings, diluted
headline earnings, diluted adjusted earnings and diluted EPRA earnings per share 1,011,666,788 939,394,339
Basic earnings per share 12.78c 8.89c
Diluted earnings per share 12.72c 8.65c
Basic EPRA earnings per share 4.47c 3.04c
Diluted EPRA earnings per share 4.45c 2.96c
Headline earnings per share 4.33c 3.04c
Diluted headline earnings per share 4.31c 2.95c
Adjusted earnings per share 4.58c 3.94c
Adjusted diluted earnings per share 4.56c 3.84c
(1) See reconciliation between adjusting items as stated within earnings per share and those stated within administrative expenses
in note 6 below.
Year ended Year ended
31 March 2019 31 March 2018
Notes EUR000 EUR000
Non-recurring items 6 209 1,513
Finance restructuring costs 9 - 2,207
Selling costs relating to assets held for sale 6 - 52
LTIP and SIP 6 232 4,310
Change in deferred tax assets 10 811 (571)
Accrual relating to tax treatment of swap break 10 (151) 839
Adjusting items as per note 11 1,101 8,349
EPRA earnings
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Basic and diluted earnings attributable to owners of the Company 128,657 81,272
Gain on revaluation of investment properties (99,887) (63,452)
(Gain)/loss on disposal of properties (including tax) (441) 4,423
Change in fair value of derivative financial instruments 1,495 (43)
Deferred tax in respect of EPRA adjustments 15,138 5,492
NCI in respect of the above 33 91
EPRA earnings 44,995 27,783
For more information on EPRA earnings refer to Annex 1.
For the calculation of basic, headline, adjusted and diluted earnings per share the number of shares has been reduced by nil
shares (2018: 574,892 shares), which are held by the Company as Treasury Shares at 31 March 2019.
The weighted average number of shares for the purpose of diluted, EPRA diluted, headline diluted and adjusted diluted earnings
per share is calculated as follows:
2019 2018
Weighted average number of ordinary shares for the purpose of basic, basic EPRA, headline
and adjusted earnings per share 1,006,966,788 914,479,339
Effect of grant of SIP shares - 1,065,000
Effect of grant of LTIP shares 4,700,000 23,850,000
Weighted average number of ordinary shares for the purpose of diluted, diluted EPRA,
diluted headline and adjusted diluted earnings per share 1,011,666,788 939,394,339
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.
12. Net asset value per share
2019 2018
EUR000 EUR000
Net asset value
Net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) 725,808 625,461
Deferred tax arising on revaluation gain, derivative financial instruments and LTIP valuation 41,623 25,674
Derivative financial instruments 902 298
Adjusted net asset value attributable to owners of the Company 768,333 651,433
Number of shares
Number of ordinary shares for the purpose of net asset value per share 1,022,140,875 991,329,614
Number of ordinary shares for the purpose of EPRA net asset value per share 1,026,840,875 1,016,244,614
Net asset value per share 71.01c 63.09c
Adjusted net asset value per share 75.17c 65.71c
EPRA net asset value per share 74.82c 64.18c
Net asset value at the end of the year (basic) 725,808 625,461
Derivative financial instruments at fair value 902 298
Deferred tax in respect of EPRA adjustments 41,623 26,485
EPRA net asset value 768,333 652,244
For more information on adjusted net asset value and EPRA net asset value refer to Annex 1.
The number of ordinary shares for the purpose of EPRA net asset value per share is calculated as follows:
2019 2018
Number of ordinary shares for the purpose of net asset value per share 1,022,140,875 991,329,614
Effect of grant of SIP shares - 1,065,000
Effect of grant of LTIP shares 4,700,000 23,850,000
Number of ordinary shares for the purpose of EPRA net asset value per share 1,026,840,875 1 1,016,244,614
The number of shares has been reduced by nil shares (2018: 574,892 shares), which are held by the Company as Treasury Shares
at 31 March 2019 for the calculation of net asset value and adjusted net asset value per share.
13. Investment properties
The movement in the book value of investment properties is as follows:
2019 2018
EUR000 EUR000
Total investment properties at book value as at 1 April 913,843 727,295
Additions 101,663 127,799
Capital expenditure 27,127 20,662
Disposals (10,032) (8,040)
Reclassified as assets held for sale (note 14) (159,620) (17,325)
Gain on revaluation above capex 100,092 58,971
Adjustment in respect of lease incentives (205) (487)
Movement in Directors' impairment of non-core assets - 4,968
Total investment properties at book value as at 31 March(1) 972,868 913,843
In the prior financial year the Group released a write down of an asset in amount of EUR4,968,000 which was made as of 31 March 2017
based on challenging market conditions.
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:
2019 2018
EUR000 EUR000
Investment properties at market value per valuer's report(1) 975,991 917,340
Adjustment in respect of lease incentives (3,122) (3,497)
Total investment properties at book value as at 31 March(1) 972,868 913,843
(1) Excluding assets held for sale.
The fair value (market value) of the Group's investment properties at 31 March 2019 has been arrived at on the basis of a valuation
carried out at that date by Cushman & Wakefield LLP (2018: Cushman & Wakefield LLP), an independent valuer accredited in
terms of the RICS.
The value of each of the properties has been assessed in accordance with the RICS valuation standards on the basis of market
value. See note 2(l) for further details.
The weighted average lease expiry remaining across the whole portfolio at 31 March 2019 was 2.8 years (2018: 2.6 years).
The reconciliation of gain on revaluation above capex as per the statement of comprehensive income is as follows:
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Gain on revaluation above capex 100,092 58,971
Adjustment in respect of lease incentives (205) (487)
Movement in Directors' impairment of non-core assets - 4,968
Gain on revaluation of investment properties reported in the statement of comprehensive
income 99,887 63,452
Included in the gain on revaluation of investment properties reported in the statement of comprehensive income are gross gains of
EUR105.0 million and gross losses of EUR5.1 million (31 March 2018: gross gains of EUR72.9 million and gross losses of EUR9.4 million).
Other than the capital commitments disclosed in note 27, the Group is under no contractual obligation to purchase, construct or
develop any investment property. The Group is responsible for routine maintenance to the investment properties.
All investment properties are categorised as Level 3 fair values as they use significant unobservable inputs. There have not been
any transfers between levels during the 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:
As at 31 March 2019
Sector Market value (EUR) Technique Significant assumption Range
Traditional business park 593,620,000 Discounted cash flow Current rental income EUR315k-EUR6,197k
Market rental income EUR424k-EUR6,094k
Gross initial yield 4.7%-10.0%
Discount factor 4.4%-8.0%
Void period (months) 12-24
Estimated capital value per sqm EUR301-EUR1,141
Modern business park 217,790,000 Discounted cash flow Current rental income EUR463k-EUR3,169k
Market rental income EUR478k-EUR3,574k
Gross initial yield 5.4%-8.3%
Discount factor 4.4%-7.3%
Void period (months) 12-24
Estimated capital value per sqm EUR588-EUR1,568
Office 164,580,000 Discounted cash flow Current rental income EUR69k-EUR3,149k
Market rental income EUR512k-EUR3,509k
Gross initial yield 0.8%-9.0%
Discount factor 5.0%-7.8%
Void period (months) 12-24
Estimated capital value per sqm EUR581-EUR1,349
As at 31 March 2018
Sector Market value (EUR) Technique Significant assumption Range
Traditional business park 580,110,000 Discounted cash flow Current rental income EUR190k-EUR5,858k
Market rental income EUR424k-EUR5,800k
Gross initial yield 0.7%-14.9%
Discount factor 5.8%-12.0%
Void period (months) 12-24
Estimated capital value per sqm EUR67-EUR967
Modern business park 216,400,000 Discounted cash flow Current rental income EUR455k-EUR3,020k
Market rental income EUR478k-EUR3,469k
Gross initial yield 4.2%-8.9%
Discount factor 6.1%-8.5%
Void period (months) 12-24
Estimated capital value per sqm EUR522-EUR1,426
Office 120,830,000 Discounted cash flow Current rental income EUR0k-EUR2,045k
Market rental income EUR537k-EUR2,135k
Gross initial yield 0.0%-10.1%
Discount factor 6.3%-8.1%
Void period (months) 12-24
Estimated capital value per sqm EUR575-EUR1,290
The valuation for the full portfolio including those assets disclosed within the disposal group is 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.
For example, an increase in market rental values of 5% would lead to an increase in the fair value of the investment properties of
EUR57,580,000 and a decrease in market rental values of 5% would lead to a decrease in the fair value of the investment properties of
EUR57,660,000. Similarly, an increase in the discount rates of 0.25% would lead to a decrease in the fair value of the investment
properties of EUR23,480,000 and a decrease in the discount rates of 0.25% would lead to an increase in the fair value of the
investment properties of EUR24,050,000.
Most of the Group's properties are pledged as security for loans obtained by the Group. See note 20 for details.
14. Assets held for sale
31 March 2019 31 March 2018
EUR000 EUR000
Bremen Brinkman - 15,500
Rostock land - 1,200
Markgroningen residential - 625
Balance as at year end - 17,325
Disposal group
In March 2019, the Group entered into a contract to dispose of a 65% interest in certain subsidiaries controlled by the Group
holding investments in five investment properties to AXA IM - Real Assets. As at 31 March 2019, a disposal has not been
recognized as certain conditions of the sale have not been met. The transaction is expected to be complete in July 2019 at which
point the Group will cease to control the subsidiaries. The remaining 35% interest will be accounted for as an Investment in
associate. Accordingly, the assets and liabilities of the disposal group have been separately presented on the face of the balance
sheet as required by IFRS 5.
The proceeds from the disposal group is expected to exceed the carrying value of the related net assets and accordingly no
impairment losses have been recognised on the classification of the disposal group as held for sale.
The major classes of the assets and liabilities comprising the disposal group classified as held for sale at 31 March 2019 are as
follows:
31 March 2019
EUR000
Assets
Investment properties 159,620
Trade and other receivables 1,075
Cash and cash equivalents 3,940
Assets held for sale 164,635
Current liabilities
Trade and other payables (3,659)
Interest-bearing loans and borrowings* (917)
Current tax liabilities (15)
Total current liabilities (4,591)
Non-current liabilities
Interest-bearing loans and borrowings** (47,706)
Deferred tax liabilities (10,745)
Total non-current liabilities (58,451)
Liabilities directly associated with assets held for sale (63,042)
Net assets of the disposal group 101,593
(*) Including capitalised finance charges in amount of EUR260,000.
(*) Including capitalised finance charges in amount of EUR681.000.
The reconciliation of the valuation of investment properties within the disposal group carried out by the external valuer to the
carrying values shown in the statement of financial position is as follows:
31 March 2019
EUR000
Investment properties at market value per valuer's report 160,200
Adjustment in respect of lease incentives (580)
Total investment properties at book value as at 31 March 159,620
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:
Sector Market value (EUR) Technique Significant assumption Range
Traditional business park 125,300,000 Discounted cash flow Current rental income EUR1,405k-EUR3,244k
Market rental income EUR1,372k-EUR3,485k
Gross initial yield 5.6%-6.8%
Discount factor 4.4%-4.8%
Void period (months) 12-24
Estimated capital value per sqm EUR629-EUR1,094
Modern business park 34,900,000 Discounted cash flow Current rental income EUR2,581k-EUR2,581k
Market rental income EUR2,434k-EUR2,434k
Gross initial yield 7.2%-7.2%
Discount factor 4.8%-4.8%
Void period (months) 12-24
Estimated capital value per sqm EUR1,250-EUR1,250
15. Plant and equipment
Plant and Fixtures
equipment and fittings Total
EUR000 EUR000 EUR000
Cost
As at 31 March 2018 6,894 3,545 10,439
Additions in year 1,061 628 1,689
Disposals in year (17) (16) (33)
As at 31 March 2019 7,938 4,157 12,095
Depreciation
As at 31 March 2018 (5,286) (2,027) (7,313)
Charge for year (770) (603) (1,373)
Disposals in year 14 15 29
As at 31 March 2019 (6,042) (2,615) (8,657)
Net book value as at 31 March 2019 1,896 1,542 3,438
Cost
As at 31 March 2017 6,013 2,826 8,839
Additions in year 896 753 1,649
Disposals in year (15) (34) (49)
As at 31 March 2018 6,894 3,545 10,439
Depreciation
As at 31 March 2017 (4,520) (1,755) (6,275)
Charge for year (780) (306) (1,086)
Disposals in year
14 34 48
As at 31 March 2018 (5,286) (2,027) (7,313)
Net book value as at 31 March 2018 1,608 1,518 3,126
16. Goodwill
2019 2018
EUR000 EUR000
Opening balance 3,738 3,738
Closing balance 3,738 3,738
On 30 January 2012, a transaction was completed to internalise the Asset Management Agreement and, as a result of the
consideration given exceeding the net assets acquired, goodwill of EUR3,738,000 was recognised. Current business plans indicate
that the balance is unimpaired.
Goodwill is tested at least annually for impairment and whenever there are indications that goodwill might be impaired. The
recoverable amount of a cash-generating unit is based on its value in use. Value in use is the present value of the projected cash
flows of the cash-generating unit. The key assumptions regarding the value in use calculations were budgeted growth in revenue
and the discount rate applied. Budgeted profit margins were estimated based on actual performance over the past two financial
years and expected market changes. The discount rate used is a pre-tax rate and reflects the risks specific to the real estate
industry. The Group prepares cash flow forecasts based on the most recent financial budget approved by management, which
covers a one year period. Cash flows beyond this period are extrapolated to a period of five years using a revenue growth rate of
2.0% (2018: 2.0%), which is consistent with the long-term average growth rate for the real estate sector. A discount rate of 7.24%
(2018: 7.05%) and terminal value of 5.24% (2018: 5.05%) was applied in the impairment review. A discount rate of 8.80% (2018: 8.30%)
would be required for the carrying value of goodwill to be greater than the fair value. A negative revenue growth rate of
0.47% (2018: 0.77%) would be required for the carrying value of goodwill to be greater than the fair value.
17. Trade and other receivables
Re-presented(*)
Year ended 31
2019 March 2018
EUR000 EUR000
Trade receivables 4,747 3,899
Other receivables 4,678 3,773
Prepayments 1,403 35,641
Balance as at year end 10,828 43,313
(*) See note 2(b)
Other receivables include lease incentives of EUR3,122,000 (2018: EUR3,497,000).
Prepayments include amounts totalling EUR410,000 (2018: EUR34,585,000) relating to the acquisition of an asset that completed post
year end (see note 30).
18. Cash and cash equivalents
2019 2018
EUR000 EUR000
Cash at bank 15,954 64,414
Restricted cash 20,388 15,191
Balance as at year end 36,342 79,605
Cash at bank earns interest at floating rates based on daily bank deposit rates. The fair value of cash as at 31 March 2019 is
EUR36,342,000 (2018: EUR79,605,000).
As at 31 March 2019 EUR20,388,000 (2018: EUR15,191,000) of cash is held in restricted accounts. EUR9,227,000 (2018: EUR8,256,000)
relates to deposits received from tenants. An amount of EURnil (2018: EUR16,000) is cash held in escrow as requested by a supplier and
EUR131,000 (2018: EUR131,000) is held in restricted accounts for office rent deposits. An amount of EUR2,227,000 (2018: EUR3,344,000)
relates to amounts reserved for future bank loan interest and amortisation payments, pursuant to certain of the Group's banking
facilities. An amount of EUR1,520,000 (2018: EUR3,268,000) relates to amounts reserved for future capital expenditure. An amount of
EUR983,000 (2018: EUR176,000) relates to amounts reserved for future debt servicing, pursuant to certain of the Group`s banking
facilities and an amount of EUR6,300,000 (2018: EURnil) relates to disposal proceeds retained as security.
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 31 March 2019:
2019 2018
EUR000 EUR000
Cash at bank 15,954 64,414
Restricted cash 20,388 15,191
Cash at bank and restricted cash attributable to the disposal group 3,940 -
Balance as at year end 40,282 79,605
19. Trade and other payables
2019 2018
EUR000 EUR000
Trade payables 4,903 6,381
Accrued expenses 15,510 14,453
Interest and amortisation payable 1,913 2,031
Tenant deposits 9,227 8,737
Unearned revenue 3,682 3,475
Other payables 5,520 5,895
Balance as at year end 40,755 40,972
Accrued expenses include costs totalling EUR5,465,000 (2018: EUR5,626,000) relating to service charge costs that have not been
invoiced to the Group.
Unearned revenue include service charge amounts. All unearned revenue of the prior year was recognised as revenue in the
current year.
20. Interest-bearing loans and borrowings
Interest rate 2019 2018
% Loan maturity date EUR000 EUR000
Current
Deutsche Genossenschafts-Hypothekenbank AG
- fixed rate facility* 1.59 31 March 2021 - 320
Bayerische Landesbank
- hedged floating rate facility Hedged(1) 19 October 2020 508 508
SEB AG
- fixed rate facility 1.84 1 September 2022 1,180 1,180
- hedged floating rate facility Hedged(2) 30 October 2024 459 229
- 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 2,278 2,551
Berlin Hyp AG
- fixed rate facility* 1.48 29 October 2023 1,826 1,799
K-Bonds I
- fixed rate facility* 6.00 31 July 2020 460 1,000
Saarbrucken Sparkasse
- fixed rate facility 1.53 28 February 2025 737 726
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged(4) 31 December 2023 432 -
- floating rate facility Floating(5) 31 December 2023 10 -
Capitalised finance charges on all loans (1,242) (1,229)
7,408 7,844
Non-current
Deutsche Genossenschafts-Hypothekenbank AG
- fixed rate facility* 1.59 31 March 2021 - 14,040
Bayerische Landesbank
- hedged floating rate facility Hedged(1) 19 October 2020 23,098 23,606
SEB AG
- fixed rate facility 1.84 1 September 2022 53,690 54,870
- hedged floating rate facility Hedged(2) 30 October 2024 22,242 22,701
- capped floating rate facility Capped(3) 25 March 2025 36,480 37,240
Berlin Hyp AG/Deutsche Pfandbriefbank AG
- fixed rate facility* 1.66 27 April 2023 69,149 81,554
Berlin Hyp AG
- fixed rate facility 1.48 29 October 2023 63,871 65,697
K-Bonds I
- fixed rate facility* 4.00 31 July 2023 20,685 45,000
- fixed rate facility* 6.00 31 July 2020 460 2,000
Saarbrucken Sparkasse
- fixed rate facility 1.53 28 February 2025 16,537 17,274
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged(4) 31 December 2023 21,178 -
- floating rate facility Floating(5) 31 December 2023 494 -
Capitalised finance charges on all loans (3,831) (4,748)
324,053 359,234
Total 331,461 367,078
(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 1.40%.
(5) Tranche 3 of this facility is charged with a floating rate of 1.2% over three month EURIBOR (not less than 0%) for the full term of
the loan.
* This facility has been removed or partially removed into the disposal group (see note 14).
The borrowings are repayable as follows:
2019 2018
EUR000 EUR000
On demand or within one year 8,650 9,073
In the second year 31,310 9,383
In the third to tenth years inclusive 296,574 354,599
Total 336,534 373,055
The Group has pledged 48 (2018: 44) investment properties (including those investment properties disclosed within the disposal
group) to secure several separate interest-bearing debt facilities granted to the Group. The 48 (2018: 44) properties had a
combined valuation of EUR1,080,819,000 as at 31 March 2019 (2018: EUR872,408,000).
Deutsche Genossenschafts-Hypothekenbank AG
On 24 March 2016, the Group agreed to a facility agreement with Deutsche Genossenschafts-Hypothekenbank AG for EUR16.0 million.
As at 31 March 2017 tranche 1 had been drawn down totalling EUR15.0 million. The loan terminates on 31 March 2021.
Amortisation is 2% per annum with the remainder of the loan due in the fifth year. The facility is charged at a fixed interest rate of
1.59%. The facility is secured over one property asset and is subject to various covenants with which the Group has complied. No
changes have occurred during the twelve month period ended 31 March 2019.
This loan, amounting to EUR14.0 million is included within the disposal group detailed in note 14 and included within liabilities directly
associated with assets held for sale in the consolidated statement of financial position.
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 fifth 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 property assets and is subject
to various covenants with which the Group has complied. No changes have occurred during the twelve month period ended 31 March 2019.
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 of the fourteen
property assets previously financed through the Macquarie loan facilities. The facility is subject to various covenants with which the
Group has complied. No changes have occurred during the twelve month period ended 31 March 2019. 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 have occurred during the
twelve month period ended 31 March 2019.
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.
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 loan was due to terminate on 31 March 2019. Amortisation was 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) was charged interest at 3% plus three
month EURIBOR and is capped at 4.5%, and the other half (EUR55.2 million) was hedged at a rate of 4.265% until 31 March 2019.
This facility was secured over nine property assets and was subject to various covenants with which the Group 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 was split in two tranches totalling EUR137.0 million and is due to terminate 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, was 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 was 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 from Tranche 1 following the disposal of the Dusseldorf 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 comprising only tranche 1 is now secured over nine property assets. No changes have
occurred during the twelve month period ended 31 March 2019.
A total of EUR10.1 million of this loan is included within the disposal group detailed in note 14 and included within liabilities directly
associated with assets held for sale in the consolidated statement of financial position.
Berlin Hyp AG
On 15 December 2014, the Group agreed to a facility agreement with Berlin Hyp AG for EUR36.0 million. The loan was due to
terminate on 31 December 2019. Amortisation was 2% per annum for the first two years, 2.4% for the third year and 2.8%
thereafter, with the remainder due in the fifth year. The facility was charged at a fixed interest rate of 2.85%. This facility was
secured over three property assets and was subject to various covenants with which the Group complied. On 28 April 2016, the
Group agreed to add an additional tranche to this facility which had an outstanding balance of EUR35.1 million at 31 March 2016. The
additional tranche of EUR4.5 million brought the total loan to EUR39.6 million. The maturity of the additional loan tranche was coterminous
with the existing loan at 31 December 2019. Amortisation was 2.5% per annum, with the remainder due at maturity. The additional
loan tranche was charged with a fixed interest rate of 1.32% for the full term of the loan. The original facility agreement was
amended to include one previously unencumbered property asset located in Wurselen. The loan was subject to various covenants
with which the Group complied.
On 20 October 2016, the Group concluded an agreement with Berlin Hyp AG to refinance and extend this 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. No changes have occurred during the twelve month period ended 31 March 2019.
K-Bonds
On 1 August 2013, the Group agreed to a facility agreement with K-Bonds for EUR52.0 million. The loan consists of a senior tranche of
EUR45.0 million and a junior tranche of EUR7.0 million. The senior tranche has a fixed interest rate of 4% per annum and is due in one
sum on 31 July 2023. The junior tranche has a fixed interest rate of 6% and terminates on 31 July 2020. The junior tranche is
amortised at EUR1.0 million per annum over a seven year period. This facility is secured over three properties and is subject to various
covenants with which the Group has complied. No changes have occurred during the twelve month period ended 31 March 2019.
A total of EUR25.4 million of the loan is included within the disposal group detailed in note 14 and included within liabilities directly
associated with assets held for sale in the consolidated statement of financial position.
Saarbrucken Sparkasse
On 28 March 2018, the Group agreed to a facility agreement with Saarbrucken 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 have occurred during the twelve month period
ended 31 March 2019.
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 draw
down of tranche 3 totalling EUR0.5 million is charged with a floating rate of 1.20% over three month EURIBOR (not less than 0%) until
31 December 2023 and requires a hedging instrument to be put in place in order to fix the rate before the end of 30 June 2019. The
loan terminates on 31 December 2023. Amortisation is 2% per annum with the remainder due in one instalment on the final
maturity date. This facility is secured over four property assets and is subject to various covenants with which the Group has
complied.
A summary of the Group's debt covenants including those disclosed in the disposal group is set out below:
Required
Outstanding Property Loan loan Interest Debt service
at values at to value to value cover cover Debt yield Cover ratio
31 March 31 March ratio at covenant at ratio at ratio at ratio at covenant at
2019 2019 31 March 31 March 31 March 31 March 31 March 31 March
EUR000 EUR000 2019(1) 2019 2019 (2) 2019(2) 2019(2) 2019
Deutsche Genossenschafts-
Hypothekenbank AG 14,040 34,861 40.3% 68.0% n/a 2.03 n/a 1.25
Bayerische Landesbank 23,606 74,196 31.8% 65.0% n/a 4.73 n/a 2.50
SEB AG 54,870 142,612 38.5% 55.0% 7.52 n/a n/a 5.90
SEB AG II 22,701 47,461 47.8% 61.5% n/a n/a 8.0% 1.90
SEB AG III 37,240 80,277 46.4% 60.0% n/a n/a 11.5% 7.50
Berlin Hyp AG/Deutsche
Pfandbriefbank AG 81,554 307,936 26.5% 62.5% n/a 3.46 n/a 1.50
Berlin Hyp AG 65,697 173,485 37.9% 65.0% n/a 3.59 n/a 1.40
K-Bonds I 47,000 126,723 37.1% n/a 4.98 n/a n/a 2.50
Saarbrucken Sparkasse 17,274 29,100 59.4% n/a n/a 2.52 n/a 2.00
Deutsche Pfandbriefbank AG 22,114 64,168 34.5% 60% n/a n/a 10.15 6.50
Unencumbered properties - 51,669 n/a
Total 386,096 1,132,488 34.1%
(1) Based on Cushman & Wakefield LLP valuations adjusted in respect of lease incentives.
(2) Based on contractual calculations which are often less representative of actual trading performance.
Reconciliation of movements of liabilities arising from financing activities:
Derivatives
held to hedge
long-term
Liabilities borrowings
Interest rate
swap used
Loans and Other for hedging
borrowings liabilities liabilities Total
As at 31 March 2017 341,792 509 341 342,642
Changes from financing cash flow
Proceeds from loans and borrowings 78,930 - - 78,930
Repayment of loans (53,551) - - (53,551)
Transaction cost related to loans and borrowings - - - -
Exit fees/prepayment penalties - (1,348) - (1,348)
Interest paid - (7,451) - (7,451)
Total cash movements 25,379 (8,799) - 16,580
Changes in fair value - - (43) (43)
Accrued amortisation and interest (903) 10,322 - 9,419
Transaction cost related to loans and borrowings 810 - - 810
Reclassified as part of disposal group - - - -
Total non-cash movements (93) 10,322 (43) 10,186
As at 31 March 2018 367,078 2,032 298 369,408
Changes from financing cash flow
Proceeds from loans and borrowings 22,114 - - 22,114
Repayment of loans (8,135) (927) - (9,062)
Transaction cost related to loans and borrowings (1,406) - - (1,406)
Exit fees/prepayment penalties - - - -
Interest paid - (7,411) - (7,411)
Total cash movements 12,573 (8,338) - 4,235
Changes in fair value - - 854 854
Accrued amortisation and interest (856) 8,025 - 7,169
Transaction cost related to loans and borrowings 1,369 - - 1,369
Reclassified as part of disposal group (48,703) (382) - (49,085)
Total non-cash movements (48,190) 7,643 854 (39,693)
As at 31 March 2019 331,461 1,337 1,152 333,950
21. Financial risk management objectives and policies
The Group's principal financial liabilities comprise bank loans, derivative financial instruments and trade payables. The main
purpose of these financial instruments is to raise finance for the Group's operations. The Group has various financial assets, such
as trade receivables and cash, which arise directly from its operations.
The main risks arising from the Group's financial instruments are credit risk, liquidity risk, market risk and interest rate risk.
Credit risk
Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from
financial assets on hand at the reporting date. The credit risk on liquid funds is limited because the counterparties are banks with
high credit ratings assigned by international credit rating agencies. The risk management policies employed by the Group to
manage these risks are discussed below. In the event of a default by an occupational tenant, the Group will suffer a rental shortfall
and incur additional costs, including expenses incurred to try and recover the defaulted amounts and legal expenses in maintaining,
insuring and marketing the property until it is re-let. During the year, the Group monitored the tenants in order to anticipate and
minimise the impact of defaults by occupational tenants, as well as to ensure that the Group has a diversified tenant base.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was:
2019 2018
EUR000 EUR000
Trade receivables 4,747 3,899
Other receivables 3,368 2,026
Derivative financial instruments 250 -
Cash and cash equivalents 36,342 79,605
44,707 85,530
The ageing of trade receivables at the statement of financial position date was:
Gross Impairment Gross Impairment
2019 2019 2018 2018
EUR000 EUR000 EUR000 EUR000
0-30 days 5,521 (1,467) 5,238 (1,984)
31-120 days (past due) 513 (327) 437 (298)
More than 120 days 2,235 (1,728) 2,702 (2,196)
8,269 (3,522) 8,377 (4,478)
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
2019 2018
EUR000 EUR000
Balance at 1 April (4,478) (4,142)
Impairment loss released/(recognised) 956 (336)
Balance at 31 March (3,522) (4,478)
The allowance account for trade receivables is used to record impairment losses unless the Group believes that no recovery of the
amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly.
Most trade receivables are generally due one month in advance. The exception is service charge balancing billing, which is due ten
days after it has been invoiced. Included in the Group's trade receivables are debtors with carrying amounts of EUR4,747,000 (2018:
EUR3,899,000) that are past due at the reporting date for which the Group has not provided as there has not been a significant change
in credit quality and the amounts are still considered recoverable.
No impairment has been recognised relating to non-current receivables in the period.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially
enhances profitability but can also increase the risk of losses. The Group has procedures with the objective of minimising such
losses, such as maintaining sufficient cash and other highly liquid current assets and having available an adequate amount of
committed credit facilities. The Group prepares cash flow forecasts and continually monitors its ongoing commitments compared to
available cash. Cash and cash equivalents are placed with financial institutions on a short-term basis which allows immediate
access. This reflects the Group's desire to maintain a high level of liquidity in order to meet any unexpected liabilities that may arise
due to the current financial position. Similarly, accounts receivable are due either in advance (e.g. rents and recharges) or within
ten days (e.g. service charge reconciliations), further bolstering the Group's liquidity level.
The table below summarises the maturity profile of the Group's financial liabilities as at 31 March 2019, based on contractual
undiscounted payments:
Bank and Derivative Trade
shareholder financial and other
loans instruments payables Total
Year ended 31 March 2019 EUR000 EUR000 EUR000 EUR000
Undiscounted amounts payable in:
Six months or less (7,641) (157) (19,241) (27,039)
Six months to one year (7,157) (156) - (7,313)
One to two years (37,117) (239) - (37,356)
Two to five years (241,852) (451) - (242,303)
Five to ten years (68,339) (84) - (68,423)
(362,106) (1,087) (19,241) (382,434)
Interest 25,572 1,087 - 26,659
(336,534) - (19,241) (355,775)
Bank and Derivative Trade
shareholder financial and other
loans instruments payables Total
Year ended 31 March 2018 EUR000 EUR000 EUR000 EUR000
Undiscounted amounts payable in:
Six months or less (8,659) (165) (40,972) (49,796)
Six months to one year (7,851) (163) - (8,014)
One to two years (16,627) (323) - (16,950)
Two to five years (129,888) (549) - (130,437)
Five to ten years (246,970) (231) - (247,201)
(409,995) (1,431) (40,972) (452,398)
Interest 36,940 1,431 - 38,371
(373,055) - (40,972) (414,027)
Currency risk
There is no significant foreign currency risk as most of the assets and liabilities of the Group are maintained in euros. Small
amounts of UK sterling and South African rand are held to ensure payments made in UK sterling and South African rand can be
achieved at an effective rate.
Interest rate risk
The Group's exposure to interest rate risk relates primarily to the Group's long-term floating rate debt obligations. The Group's
policy is to mitigate interest rate risk by ensuring that a minimum of 80% of its total borrowing is at fixed or capped interest rates by
taking out fixed rate loans or derivative financial instruments to hedge interest rate exposure, or interest rate caps.
A change in interest will only have an impact on the floating loans capped due to the fact that the other loans have a general fixed
interest rate or they are effectively fixed by a swap. An increase in 100bps in interest rate would result in a decreased post tax profit
in the consolidated statement of comprehensive income of EUR290,000 (excluding the movement on derivative financial instruments)
and a decrease in 100bps in interest rate would result in an increased post tax profit in the consolidated statement of
comprehensive income of EUR290,000 (excluding the movement on derivative financial instruments).
Market risk
The Group's activities are within the real estate market, exposing it to very specific industry risks.
The yields available from investments in real estate depend primarily on the amount of revenue earned and capital appreciation
generated by the relevant properties, as well as expenses incurred. If properties do not generate sufficient revenues to meet
operating expenses, including debt service and capital expenditure, the Group's revenue will be adversely affected.
Revenues from properties may be adversely affected by: the general economic climate; local conditions, such as an oversupply of
properties, or a reduction in demand for properties, in the market in which the Group operates; the attractiveness of the properties
to the tenants; the quality of the management; competition from other available properties; and increased operating costs.
In addition, the Group's revenue would be adversely affected if a significant number of tenants were unable to pay rent or its
properties could not be rented on favourable terms. Certain significant expenditures associated with each equity investment in real
estate (such as external financing costs, real estate taxes and maintenance costs) are generally not reduced when circumstances
cause a reduction in revenue from properties. By diversifying in product, risk categories and tenants, the Group expects to lower
the risk profile of the portfolio.
Capital management
The Group seeks to enhance shareholder value both by investing in the business so as to improve the return on investment and by
managing the capital structure.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or
adjust the capital structure, the Group may adjust the dividend payment to shareholders, issue shares or undertake transactions
such as those that occurred with the internalisation of the Asset Management Agreement.
The Company holds none of its own shares as Treasury Shares. During the year to 31 March 2019 574,892 shares were issued
from treasury and no shares were bought back.
The Group monitors capital using a gross debt to property assets ratio, which was 34.1% including investment properties held for
sale and corresponding interest-bearing loans and borrowings as at 31 March 2019 (2018: 40.1%).
The Group is not subject to externally imposed capital requirements other than those related to the covenants of the bank loan
facilities.
22. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts and fair values of all of the Group's financial instruments that are
carried in the financial statements (excluding assets held for sale and liabilities directly associated with assets held for sale):
Fair value
hierarchy level 2019 2018
Carrying Fair Carrying Fair
amount value amount value
EUR000 EUR000 EUR000 EUR000
Financial assets
Cash 1 36,342 36,342 79,605 79,605
Trade and other receivables 2 8,115 8,115 5,925 5,925
Derivative financial instruments 2 250 250 - -
Financial liabilities
Trade and other payables 2 19,241 19,241 19,803 19,803
Derivative financial instruments
Interest-bearing loans and borrowings(1): 2 1,152 1,152 298 298
Floating rate borrowings 2 504 504 38,000 38,000
Floating rate borrowings - hedged(2) 2 67,917 67,917 47,044 47,044
Floating rate borrowings - capped(2) 2 37,240 37,240 - -
Fixed rate borrowings 2 230,873 232,515 288,011 293,547
(1) Excludes loan issue costs.
(2) 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 interest rate swap contract is reset on a quarterly basis. The Company will settle the difference between the fixed and floating
interest rates on a net 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.
Interest rate risk
The following table sets out the carrying amount, by maturity, of the Group's financial instruments that are exposed to interest rate risk:
Within 1 year 1-2 years 2-3 years 3-4 years 4+ years Total
2019 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
SEB AG (760) (760) (760) (760) (34,200) (37,240)
Deutsche Pfandbriefbank AG (10) (10) (10) (10) (464) (504)
Within 1 year 1-2 years 2-3 years 3-4 years 4+ years Total
2018 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
SEB AG (760) (760) (760) (760) (34,960) (38,000)
The other financial instruments of the Group that are not included in the above tables are non-interest bearing or have fixed interest
rates and are therefore not subject to interest rate risk.
23. Issued share capital
Share
Number capital
Authorised of shares EUR
Ordinary shares of no par value Unlimited -
As at 31 March 2019 and 31 March 2018 Unlimited -
The number of ordinary shares of no par value as at 31 March 2019 was unlimited.
Share
Number capital
Issued and fully paid of shares EUR
As at 31 March 2017 877,786,535 -
Issued ordinary shares 113,055,913 -
Issued Treasury Shares 487,166 -
As at 31 March 2018 991,329,614 -
Issued ordinary shares 30,236,369 -
Issued Treasury Shares 574,892 -
As at 31 March 2019 1,022,140,875 -
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.
On 9 July 2018, the Company issued 14,804,000 ordinary shares to the Company's two Executive Directors and some of the
Group's Senior Management Team, pursuant to the Company's LTIP. This resulted in the Company's overall issued share capital
being 1,006,708,506 ordinary shares, of which 574,892 were held in treasury. The total number of ordinary shares with voting rights
in the Company at this date was 1,006,133,614.
Pursuant to a scrip dividend offering on 17 August 2018, the Company issued 3,288,212 ordinary shares at an issue price of
GBP0.6499 resulting in the Company's overall issued share capital being 1,009,996,718 ordinary shares, of which 574,892 were held
in treasury. The total number of ordinary shares with voting rights in the Company at this date was 1,009,421,826.
On 7 January 2019, the Company issued 1,545,108 ordinary shares to one of the Company's Executive Directors, pursuant to the
Company's LTIP. The 574,892 shares that were held in treasury were used to supplement this issue and are no longer held by the
company. This resulted in the Company's overall issued share capital being 1,011,541,826 ordinary shares. The total number of
ordinary shares with voting rights in the Company at this date was 1,011,541,826.
Pursuant to a scrip dividend offering on 18 January 2019, the Company issued 9,537,983 ordinary shares at an issue price of
GBP0.6585 resulting in the Company's overall issued share capital being 1,021,079,809 ordinary shares. There are no shares held in
treasury. The total number of ordinary shares with voting rights in the Company at this date was 1,021,079,809.
On 11 March 2019, the Company issued 1,061,066 ordinary shares to 106 participants, pursuant to the Company's LTIP and SIP.
This resulted in the Company's overall issued share capital being 1,022,140,875. The total number of ordinary shares with voting
rights in the Company at this date was 1,022,140,875.
The Company holds none of its own shares in treasury (2018: 574,892). During the year 574,892 shares were issued from treasury
(2018: 487,166).
All shares issued in the period were issued under general authority. No shares were bought back in the year.
24. 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 EUR491,016,000 in total at 31 March 2019 (2018: EUR519,320,000).
25. Dividends
On 4 June 2018, the Company announced a dividend of 1.60c per share, with a record date of 13 July 2018 for UK and South
African shareholders and payable on 17 August 2018. On the record date, 1,006,708,506 shares were in issue, of which 574,892
were held in treasury and 1,006,133,614 were entitled to participate in the dividend. Holders of 150,721,277 shares elected to
receive the dividend in ordinary shares under the Scrip Dividend Alternative, representing a dividend of EUR2,412,000, while holders
of 854,937,248 shares opted for a cash dividend with a value of EUR13,587,000. The Company's Employee Benefit Trust waived its
rights to the dividend, reducing the cash payable to EUR13,579,000. The total dividend was EUR15,991,000.
On 19 November 2018, the Company announced a dividend of 1.63c per share, with a record date of 14 December 2018 for UK
and South African shareholders and payable on 18 January 2019. On the record date, 1,011,541,826 shares were in issue. Since
there were no shares held in treasury, 1,011,541,826 shares were entitled to participate in the dividend. Holders of 385,359,335
shares elected to receive the dividend in ordinary shares under the Scrip Dividend Alternative, representing a dividend of
EUR6,281,000 while holders of 626,182,491 shares opted for a cash dividend with a value of EUR10,207,000. The Company's Employee
Benefit Trust waived its rights to the dividend, reducing the cash payable to EUR10,185,000. The total dividend was EUR16,466,000.
The Group's profit attributable to the equity holders of the Company for the year was EUR128.7 million (2018: EUR81.3 million). The Board
has declared a final dividend of 1.73c per share for the year ended 31 March 2019 representing a pay-out ratio of 70% of
FFO(1). It is expected that for the period's final dividend the ex-dividend date will be on 10 July 2019 for shareholders on the South
African register and 11 July 2019 for shareholders on the UK register. It is further expected that the record date will be on 12 July 2019
for shareholders on the South African and UK registers and the dividend will be paid on 22 August 2019 for shareholders on
both registers.
The dividend paid per the statement of changes in equity is the value of the cash dividend.
(1) Adjusted profit before tax adjusted for depreciation, amortisation of financing fees and current tax receivable/incurred and tax
relating to disposals.
The dividend per share was calculated as follows:
31 March 2019 31 March 2018
EURm EURm
Reported profit before tax 144.7 89.6
Adjustments for:
Gain on revaluation of investment properties (99.9) (63.5)
(Gain)/loss of disposal of properties (0.6) 2.5
Other adjusting items(1) 0.4 8.1
Change in fair value of financial derivatives 1.5 -
Adjusted profit before tax 46.1 36.7
Adjustments for:
Depreciation 1.4 1.1
Amortisation of financing fees 1.4 1.2
Current taxes incurred (see note 10) - (3.4)
Add back current tax relating to disposals and prior year adjustments (0.5) 2.8
Funds from operations, year ended 31 March 48.4 38.4
Funds from operations, six months ended 30 September 23.3 18.5
Funds from operations, six months ended 31 March 25.1 19.9
Dividend pool, six months ended 30 September 16.5 14.4
Dividend pool, six months ended 31 March (2) 17.7 15.9
Dividend per share, six months ended 30 September 1.63c 1.56c
Dividend per share, six months ended 31 March 1.73c 1.60c
(1) Includes the net effect of management LTIP awards and expected costs associated with the disposal group. See note 11 for details.
(2) Calculated as 70% of FFO of 2.47c per share (31 March 2018: 2.13c per share using 75% of FFO) based on average number of shares
outstanding of 1,014,348,392 (31 March 2018: 930,142,690).
For more information on adjusted profit before tax and funds from operations refer to Annex 1.
26. Related parties
Key management personnel compensation
Fees paid to people or entities considered to be key management personnel of the Group during the year include:
2019 2018
EUR000 EUR000
Directors' fees 309 336
Salary and employee benefits 3,151 3,034
Share-based payments 232 3,550
Total 3,692 6,920
The share-based payments relating to key management personnel for the year ended 31 March 2019 include an expense of
EUR232,000 (2018: EUR3,550,000) for the granting of shares under the LTIP (see note 8).
Information on Directors' emoluments is given in the Remuneration report.
27. Capital and other commitments
The Group's operating lease commitments derived from office rental contracts are as follows:
2019 2018
EUR000 EUR000
Less than one year 7,244 6,984
Between one and five years 15,801 21,909
More than five years 262 529
23,306 29,422
As at 31 March 2019, the Group had contracted capital expenditure for development and enhancements on existing properties of
EUR8,041,000 (2018: EUR8,745,000). In addition, the Group had commitments of EUR6,995,000 (31 March 2018: EUR7,053,000) for leasehold
obligations.
These were committed but not yet provided for in the financial statements.
28. Operating lease arrangements
Group as lessor
All properties leased by the Group are under operating leases and the future minimum lease payments receivable under non-
cancellable leases are as follows:
2019 2018*
EUR000 EUR000
Less than one year 74,809 66,355
Between one and five years 135,476 112,125
More than five years 29,996 23,827
240,281 202,307
* The comparative year has been restated on the basis of sub leases as per the current year.
The Group leases out its investment properties under operating leases. Most operating leases are for terms of one to ten years.
Group as lessee
During the year the Group has expensed lease payments in amount of EUR6,291,000 (2018: 6,078,000).
29. List of subsidiary undertakings
The Group consists of 89 subsidiary companies. All subsidiaries are consolidated in full in accordance with IFRS.
Ownership at Ownership at
Country 31 March 2019 31 March 2018
Company name of incorporation % %
Curris Facilities & Utilities Management GmbH Germany 100.00 100.00
DDS Aspen B.V. Netherlands 100.00 100.00
DDS Bagnut B.V. Netherlands 100.00 100.00
DDS Business Centers B.V. Netherlands 100.00 100.00
DDS Conferencing & Catering GmbH Germany 100.00 100.00
DDS Edelweiss B.V. Netherlands 100.00 100.00
DDS Elm B.V. Netherlands 100.00 100.00
DDS Fir B.V. Netherlands 100.00 100.00
DDS Hawthorn B.V. Netherlands 100.00 100.00
DDS Hazel B.V. Netherlands 100.00 100.00
DDS Hyacinth B.V. Netherlands 100.00 100.00
DDS Lark B.V. Netherlands 100.00 100.00
DDS Lime B.V. Netherlands 100.00 100.00
DDS Maple B.V. Netherlands 100.00 100.00
DDS Mulberry B.V. Netherlands 100.00 100.00
DDS Rose B.V. Netherlands 100.00 100.00
DDS Walnut B.V. Netherlands 100.00 100.00
DDS Yew B.V. Netherlands 100.00 100.00
LB(2) Catering and Services GmbH Germany 100.00 100.00
Marba Daffodil B.V. Netherlands 100.00 100.00
Marba Holland B.V. Netherlands 100.00 100.00
Marba Lavender B.V. Netherlands 100.00 100.00
Marba Olive B.V. Netherlands 100.00 100.00
Marba Violin B.V. Netherlands 100.00 100.00
Marba Willstatt B.V. Netherlands 100.00 100.00
SFG NOVA Construction and Services GmbH Germany 100.00 100.00
Sirius Acerola GmbH & Co. KG Germany 100.00 100.00
Sirius Alder B.V. Netherlands 100.00 100.00
Sirius Aloe GmbH & Co. KG Germany 100.00 100.00
Sirius Ash B.V. Netherlands 100.00 100.00
Sirius Aster GmbH & Co. KG K Germany 100.00 100.00
Sirius Beech B.V. Netherlands 100.00 100.00
Sirius Birch GmbH & Co. KG Germany 100.00 n/a
Sirius Cooperatief U.A. Netherlands 100.00 100.00
Sirius Corporate Services B.V. Netherlands 100.00 100.00
Sirius Dahlia GmbH & Co. KG Germany 100.00 n/a
Sirius Facilities (UK) Limited UK 100.00 100.00
Sirius Facilities GmbH Germany 100.00 100.00
Sirius Finance (Guernsey) Ltd. Guernsey 100.00 100.00
Sirius Four B.V. Netherlands 100.00 100.00
Sirius Frankfurt Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Gum B.V. Netherlands 100.00 100.00
Sirius Ivy B.V. Netherlands 100.00 100.00
Sirius Juniper B.V. Netherlands 100.00 100.00
Sirius Krefeld Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Laburnum B.V. Netherlands 100.00 100.00
Sirius Lily B.V. Netherlands 100.00 100.00
Sirius Management One GmbH Germany 100.00 100.00
Sirius Management Two GmbH Germany 100.00 100.00
Sirius Management Three GmbH Germany 100.00 100.00
Sirius Management Four GmbH Germany 100.00 100.00
Sirius Management Five GmbH Germany 100.00 100.00
Sirius Management Six GmbH Germany 100.00 100.00
Sirius Mannheim B.V. Netherlands 100.00 100.00
Sirius Oak B.V. Netherlands 100.00 100.00
Sirius One B.V. Netherlands 100.00 100.00
Sirius Orange B.V. Netherlands 100.00 100.00
Sirius Orchid B.V. Netherlands 100.00 100.00
Sirius Pine B.V. Netherlands 100.00 100.00
Sirius Tamarack B.V. Netherlands 100.00 100.00
Sirius Three B.V. Netherlands 100.00 100.00
Sirius Tulip B.V. Netherlands 100.00 100.00
Sirius Two B.V. Netherlands 100.00 100.00
Sirius Willow B.V. Netherlands 100.00 100.00
Marba Bonn B.V. Netherlands 99.73 99.73
Marba Bremen B.V. Netherlands 99.73 99.73
Marba Brinkmann B.V. Netherlands 99.73 99.73
Marba Catalpa B.V. Netherlands 99.73 99.73
Marba Cedarwood B.V. Netherlands 99.73 99.73
Marba Chestnut B.V. Netherlands 99.73 99.73
Marba Dandelion B.V. Netherlands 99.73 99.73
Marba Dutch Holdings B.V. Netherlands 99.73 99.73
Marba Foxglove B.V. Netherlands 99.73 99.73
Marba HAG B.V. Netherlands 99.73 99.73
Marba Hornbeam B.V. Netherlands 99.73 99.73
Marba Konigswinter B.V. Netherlands 99.73 99.73
Marba Maintal B.V. Netherlands 99.73 99.73
Marba Marigold B.V. Netherlands 99.73 99.73
Marba Merseburg B.V. Netherlands 99.73 99.73
Marba Mimosa B.V. Netherlands 99.73 99.73
Marba Regensburg B.V. Netherlands 99.73 99.73
Marba Saffron B.V. Netherlands 99.73 99.73
Marba Troisdorf B.V. Netherlands 99.73 99.73
Sirius Almond GmbH & Co. KG Germany 99.73 99.73
Sirius Bluebell GmbH & Co. KG Germany 99.73 99.73
Sirius Cypress GmbH & Co. KG Germany 99.73 n/a
Sirius Administration One GmbH & Co KG Germany 94.80 94.80
Sirius Administration Two GmbH & Co KG Germany 94.80 94.80
Verwaltungsgesellschaft Gewerbepark Bilderstockchen GmbH Germany 94.15 94.15
30. Post balance sheet events
On 10 May 2019, the Group completed the acquisition of a business park located in Buxtehude, near Hamburg. Total acquisition
costs are expected to be EUR8.7 million. The property is a mixed-use business park and has a net lettable area of 28,532 sqm.
The property is 100% vacant.
On 31 May 2019, the Group completed the acquisition of a business park located in Teningen, near Freiburg. Total acquisition
costs are expected to be EUR6.5 million. The property is a mixed-use business park and has a net lettable area of 20,062 sqm.
The property is 88% occupied and let to seven tenants, producing an annual income of EUR0.8 million and having a remaining weighted
average lease term of 1.6 years.
Business analysis (Unaudited Information)
Non-IFRS measures
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
Total comprehensive income for the year attributable to the owners of the Company 128,657 81,272
Gain on revaluation of investment properties (99,887) (63,452)
(Gain)/loss on disposal of properties (net of related tax) (441) 4,423
Change in fair value of derivative financial instruments 1,495 (43)
Deferred tax in respect of EPRA adjustments 15,138 5,492
NCI in respect of the above 33 91
EPRA earnings 44,995 27,783
Add change in deferred tax relating to derivative financial instruments 54 20
Add change in fair value of derivative financial instruments (1,495) 43
NCI in respect of the above - (91)
Headline earnings after tax 43,554 27,755
Add/deduct change in fair value of derivative financial instruments net of related tax 1,441 (63)
Add adjusting items(1), net of related tax 1,101 8,349
Adjusted earnings after tax 46,096 36,041
(1) See note 11 to the financial statements.
Year ended Year ended
31 March 2019 31 March 2018
EUR000 EUR000
EPRA earnings 44,995 27,783
Weighted average number of ordinary shares 1,006,966,788 914,479,339
EPRA earnings per share (cents) 4.47 3.04
Headline earnings after tax 43,554 27,755
Weighted average number of ordinary shares 1,006,966,788 914,479,339
Headline earnings per share (cents) 4.33 3.04
Adjusted earnings after tax 46,096 36,041
Weighted average number of ordinary shares 1,006,966,788 914,479,339
Adjusted earnings per share (cents) 4.58 3.94
Geographical property analysis
% of
portfolio
Annualised by
No. of owned Total sqm Rate psqm rent roll annualised Value WALE WALE
March 2019 properties 000 Occupancy EUR EURm rent roll EURm(1) Gross yield rent sqm
Frankfurt 14 320 87.4% 5.99 20.1 23% 258.8 7.8% 2.3 2.2
Berlin 6 204 93.7% 5.86 13.5 15% 190.8 7.1% 3.4 3.6
Stuttgart 7 258 89.6% 4.70 13.0 15% 154.4 8.4% 2.6 2.6
Cologne 7 127 90.4% 7.16 9.9 11% 125.8 7.9% 2.3 2.3
Munich 2 105 81.6% 6.72 6.9 8% 115.2 6.0% 3.7 4.1
Dusseldorf 9 160 85.2% 5.15 8.4 10% 104.9 8.0% 2.5 2.1
Hamburg 2 51 60.0% 4.43 1.6 2% 25.8 6.3% 1.7 1.7
Other 8 245 80.2% 6.10 14.4 16% 156.8 9.2% 3.1 3.0
Total 55 1,470 86.1% 5.78 87.8 100% 1,132.5 7.8% 2.8 2.8
(1) Including investment properties within the disposal group.
Usage analysis
% of
% of occupied Annualised Annualised Rate
Usage Total sqm % of total sqm Occupied sqm sqm rent roll EURm rent roll Vacant sqm psqm EUR
Office 459,735 31.3% 379,085 29.9% 33.5 38.1% 80,650 7.37
Storage 472,550 32.2% 399,124 31.5% 20.6 23.5% 73,426 4.31
Production 339,885 23.1% 327,486 25.9% 16.8 19.1% 12,399 4.26
Smartspace 86,997 5.9% 64,135 5.1% 5.7 6.5% 22,862 7.36
Other(1) 110,508 7.5% 95,928 7.6% 11.2 12.8% 14,580 9.74
Total 1,469,675 100.0% 1,265,758 100.0% 87.8 100.0% 203,917 5.78
(1) Other includes: catering, other usage, residential, retail, technical space, land and car parking.
Lease expiry profile of future minimum lease payments receivable under non-cancellable leases by income:
Adjustments in
relation to
lease
Production Storage Smartspace Other incentives Total
Office EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Less than 1 year 29,525 15,798 17,836 2,468 9,533 (350) 74,809
Between 1 and 5 years 53,133 32,653 32,134 635 16,971 (51) 135,476
More than 5 years 13,075 6,448 5,700 - 4,779 (5) 29,996
Total 95,733 54,899 55,669 3,103 31,283 (406) 240,281
Lease expiry profile by future minimum lease payments receivable under non-cancellable leases by sqm:
Production Storage Smartspace Other
Office sqm sqm sqm sqm sqm Total sqm
Less than 1 year 103,560 54,338 134,595 55,913 23,421 371,827
Between 1 and 5 years 213,174 195,868 214,750 8,222 53,229 685,243
More than 5 years 62,351 77,280 49,779 - 19,278 208,688
Total 379,085 327,486 399,124 64,135 95,928 1,265,758
Escalation profile per usage
The Group's primary source of revenue relates to leasing contracts with tenants. To the extent to which these contracts contain
currently agreed uplifts the average increase by usage over the coming 12 months is detailed as follows:
Usage Increase in %
Office 3.2%
Storage 3.7%
Production 1.2%
Smartspace 7.0%
Other(1) 3.9%
Total 2.9%
(1) Other includes: catering, other usage, residential, retail, technical space, land and car parking.
Property profile March 2019
Production Rate
Property and location Total sqm Office sqm Storage sqm sqm Other sqm psqm EUR
Mahlsdorf 29,261 11,639 10,848 1,870 4,904 6.91
Mahlsdorf II 12,804 5,824 1,305 1,906 3,769 6.53
Gartenfeld 25,729 5,165 11,025 3,351 6,188 6.66
Berlin Borsigwerke I 77,175 15,929 13,444 44,276 3,526 3.84
Berlin Tempelhof 23,673 7,571 6,209 4,531 5,362 7.75
Potsdam 35,718 12,372 12,531 4,956 5,859 6.95
Bonn 10,590 4,531 3,088 477 2,494 7.33
Bonn - Dransdorf 19,152 5,453 6,736 1,657 5,306 5.95
Aachen I 24,180 12,119 2,364 5,510 4,187 8.55
Aachen II 9,766 1,594 6,360 1,601 211 4.87
Cologne 28,988 2,591 12,177 2,210 12,010 4.74
Colln Parc 13,686 6,506 3,596 2,850 734 9.63
Koln Porz 21,059 15,639 2,901 279 2,240 8.94
Neuss 17,863 14,408 1,220 153 2,082 10.02
Wuppertal 14,608 857 6,411 3,613 3,727 3.59
Solingen 13,332 2,475 4,409 4,924 1,524 2.56
Dusseldorf - Sud 21,255 2,627 13,054 1,970 3,604 4.51
Krefeld III 9,667 4,835 3,302 1,023 507 8.25
Dusseldorf II 9,838 4,433 4,949 - 456 7.36
Krefeld II 6,102 3,303 325 2,171 303 5.71
Krefeld 11,382 7,514 2,549 592 727 8.22
Bochum 55,639 12,721 35,842 3,964 3,112 4.11
Mannheim II 15,119 6,659 4,660 586 3,214 5.57
Neu-Isenburg 8,322 5,763 1,195 - 1,364 10.60
Mannheim 68,760 12,981 22,332 27,807 5,640 4.60
Maintal 37,320 7,363 15,020 8,914 6,023 5.34
Maintal Mitte 11,023 462 4,523 5,685 353 3.51
Offenbach I 15,103 3,122 3,163 3,047 5,771 5.72
Pfungstadt 33,063 6,707 10,431 11,027 4,898 4.50
Offenbach Carl Legien-Strasse 45,637 8,890 9,672 17,625 9,450 4.77
Frankfurt Rontgenstraße 5,488 3,721 576 205 986 8.98
Friedrichsdorf 17,558 6,740 5,235 2,763 2,820 6.67
Mainz 26,691 13,201 9,065 2,177 2,248 8.35
Dreieich 13,001 7,418 3,081 - 2,502 7.37
Frankfurt 4,325 1,947 443 68 1,867 8.90
Wiesbaden 18,294 13,596 1,912 - 2,786 13.31
Schenefeld 40,326 10,396 23,809 1,960 4,161 4.32
Hamburg Lademannbogen 10,350 8,190 1,197 - 963 10.03
Munich - Neuaubing 91,214 16,429 34,935 29,600 10,250 6.54
Grassbrunn 14,188 9,546 3,156 - 1,486 9.83
Rostock 18,649 8,245 1,569 6,606 2,229 5.74
Hanover 23,279 9,210 3,591 7,932 2,546 5.11
Magdeburg 30,378 11,589 9,638 4,487 4,664 6.07
Dresden 58,159 26,410 17,677 11,072 3,000 6.48
Kassel 8,144 3,315 682 3,875 272 5.05
Saarbrucken 48,221 31,255 10,693 820 5,453 8.16
Nurnberg 34,976 9,229 10,635 11,399 3,713 4.98
Bayreuth 22,736 2,186 3,352 15,286 1,912 5.37
Ludwigsburg 28,237 7,453 10,332 3,799 6,653 5.84
Stuttgart-Weilimdorf 6,765 4,970 574 144 1,077 8.54
Heidenheim 46,909 8,158 16,624 13,412 8,715 4.13
Stuttgart - Kirchheim 63,124 21,637 13,306 21,065 7,116 5.99
Markgroningen 57,732 4,580 30,721 20,335 2,096 2.93
Fellbach 27,146 1,720 18,447 235 6,744 4.15
Frickenhausen 27,974 6,542 5,661 14,070 1,701 4.68
Total 1,469,675 459,735 472,550 339,885 197,505 5.78
Annex 1 - Non-IFRS Measures
Basis of Preparation
The directors of Sirius Real Estate Limited ("Sirius") ("Directors") have chosen to disclose additional non-IFRS measures, these
include EPRA earnings, adjusted net asset value, EPRA net asset 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 property revaluation, changes in fair value of derivative financial instruments, profits and losses on disposals
(collectively the "EPRA earnings adjustments") and deferred tax in respect of these EPRA earnings adjustments. 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 and
derivatives. The reconciliation for adjusted net asset value is detailed in table B below;
- EPRA net asset value in order to assist in comparisons with similar businesses in the real estate sector. EPRA net asset
value is a definition of net asset value as set out by the European Public Real Estate Association. EPRA net asset value
represents net asset value after adjusting for derivative financial instruments and deferred tax relating to valuation
movements and derivatives (collectively the "EPRA net asset value adjustments"). The reconciliation for EPRA net asset
value 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 surplus on revaluation, adjusting items,
gains/losses on sale of properties and change in fair value of financial derivatives. The reconciliation for adjusted profit
before tax is detailed in table D below; and
- 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 depreciation, amortisation of financing fees 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. The Non-IFRS Financial
Information is the responsibility of the Directors and has been presented for illustrative purposes and, due to its nature, may not fairly
present the Group's financial position or, result of operations.
Ernst & Young Inc have issued a reporting accountants' report on the Non-IFRS Financial Information which is available for inspection
at the Group's registered office. The Non-IFRS Financial Information has been extracted from the Group's consolidated financial
statements for the year ended 31 March 2019 ("consolidated financial statements").
Table A - EPRA earnings
31 March 2019 31 March 2018
EUR000 EUR000
Basic and diluted earnings attributable to owners of the Company(1) 128,657 81,272
Gain on revaluation of investment properties (2) (99,887) (63,452)
(Gain)/loss on disposal of properties (including tax)(3) (441) 4,423
Change in fair value of derivative financial instruments(4) 1,495 (43)
Deferred tax in respect of EPRA earnings adjustments(5) 15,138 5,492
NCI in respect of the above(6) 33 91
EPRA earnings(7) 44,995 27,783
Notes:
(1) Row 1 presents the profit and total comprehensive income attributable to owners of the Companyhich has been extracted
from the consolidated statement of comprehensive income within 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 13 within the consolidated financial statements.
(3) Row 3 presents the gain or loss on disposal of properties (including tax) which has been extracted from note 6 of the
consolidated financial statements adjusted for current income tax of EUR170,000.
(4) Row 4 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.
(5) Row 5 presents deferred tax relating to origination and reversal of temporary differences which has been extracted from note
10 of the consolidated financial statements.
(6) Row 6 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 11 of the consolidated financial statements.
(7) Row 7 presents the EPRA Earnings for the year ended 31 March 2019.
Table B - Adjusted net asset value
2019 2018
EUR000 EUR000
Net asset value
Net asset value for the purpose of assets per share
(assets attributable to the owners of the Company)(1) 725,808 625,461
Deferred tax arising on revaluation gain, financial derivatives instruments and LTIP
valuation(2) 41,623 25,674
Derivative financial instruments(3) 902 298
Adjusted net asset value attributable to owners of the Company(4) 768,333 651,433
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 of EUR41,696,000 arising on revaluation gains and a credit of EUR73,000 arising on derivative
financial instruments which has been extracted from note 12 of the consolidated financial statements.
(3) Row 3 presents current derivative financial instruments assets of EUR250,000 less current derivative financial instruments
liabilities of EUR346,000 less non-current derivative financial instruments liabilities of EUR806,000 as extracted from the
consolidated statement of financial position from the consolidate financial statements.
(4) Row 4 presents the adjusted net asset value as at 31 March 2019.
Table C - EPRA net asset value
2019 2018
EUR000 EUR000
Net asset value at the end of the year (basic)(1) 725,808 625,461
Derivative financial instruments at fair value(2) 902 298
Deferred tax in respect of EPRA net asset value adjustments(3) 41,623 26,485
EPRA net asset value(4) 768,333 652,244
Notes:
(1) Row 1 presents net asset value extracted from note 12 of the consolidated financial statements.
(2) Row 2 presents current derivative financial instruments assets of EUR250,000 less current derivative financial instruments
liabilities of EUR346,000 less non-current derivative financial instruments liabilities of EUR806,000 as extracted from the consolidated
statement of financial position from the consolidated financial statements.
(3) Row 3 presents deferred tax expense of EUR41,696,000 arising on revaluation gains and a credit of EUR73,000 arising on derivative
financial instruments extracted from note 12 of the consolidated financial statements.
(4) Row 4 presents the EPRA net asset value as at 31 March 2019.
Table D - Adjusted profit before tax and funds from operations
31 March 2019 31 March 2018
EURm EURm
Reported profit before tax(1) 144.7 89.6
Adjustments for:
Gain on revaluation of investment properties(2) (99.9) (63.5)
(Gain)/loss of disposals of properties(3) (0.6) 2.5
Other adjusting items(4)1 0.4 8.1
Change in fair value of financial derivatives(5) 1.5 -
Adjusted profit before tax(6) 46.1 36.7
Adjustments for:
Depreciation(7) 1.4 1.1
Amortisation of financing fees(8) 1.4 1.2
Current taxes incurred(9) - (3.4)
Add back current tax relating to disposals and prior year adjustments(10) (0.5) 2.8
Funds from operations, year ended 31 March(11) 48.4 38.4
1 Includes the net effect of management LTIP awards and expected costs associated with the disposal group. See note 11 for details.
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 13 within the consolidated financial statements.
(3) Row 3 presents the gain or loss on disposal of properties which has been extracted from note 6 of the consolidated financial
statements.
(4) Row 4 presents other adjusting items of EUR0.2 million relating to LTIP and SIP expense and EUR0.2 million relating to
non-recurring items primarily relating to the new venture with AXA IM - Real Assets which has been extracted from note 6 of
the consolidated financial statements.
(5) Row 5 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.
(6) Row 6 presents the adjusted profit before tax for the year ended 31 March 2019.
(7) Row 7 presents depreciation as extracted from note 6 of the consolidated financial statements.
(8) Row 8 presents amortisation of capitalised finance costs which has been extracted from note 9 of the consolidated financial
statements.
(9) Row 9 presents the total current income tax which has been extracted from note 10 of the consolidated financial statements.
(10) Row 10 presents the add back of current tax relating to disposals and prior year adjustments extracted from note 10 of the
consolidated financial statements.
(11) Row 11 presents the funds from operations for the year ended 31 March 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 net of related tax and derivative
financial instruments net of related tax
Adjusted net asset value is the assets attributable to the equity owners of the Company adjusted for deferred tax
and derivative financial instruments
Adjusted profit before tax is the reported profit before tax adjusted for property revaluation, changes in fair value of
derivative financial instruments and other adjusting items
Annualised acquisition net is the income generated by a property less directly attributable costs at the date of
operating income acquisition expressed in annual terms. Please see "annualised rent roll" definition below for
further explanatory information
Annualised acquisition rent is the contracted rental income of a property at the date of acquisition expressed in annual
roll terms. Please see "annualised rent roll" definition below for further explanatory information
Annualised rent roll is the contracted rental income of a property at a specific reporting date expressed in
annual terms. Unless stated otherwise the reporting date is 31 March 2019. Annualised
rent roll should not be interpreted or used as a forecast or estimate. Annualised rent roll
differs from rental income described in note 5 of the Annual 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
- 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 return is the return calculated by combining 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 and deferred tax in respect of these
items
EPRA net asset value is the net asset value after adjusting for derivative financial instruments and deferred tax
relating to valuation movements and derivatives
EPRA net initial yield is the annualised rent roll based on the cash rents passing at the balance sheet date, less
non-recoverable property operating expenses, divided by the market value of the property,
increased with (estimated) purchasers' costs
EPRA net yield is the net operating income generated by a property expressed as a percentage of its value
plus purchase costs
Funds from operations is reported profit before tax adjusted for property revaluation, gain/loss on disposals,
change in the fair value of derivative financial instruments, adjusting items, depreciation,
amortisation of financing fees and current tax receivable/incurred
Geared IRR is an estimate of the rate of return taking into consideration debt
Gross loan to value ratio is the ratio of principal value of total debt to the aggregated value of investment property
Gross yield is the annualised rent roll generated by a property expressed as a percentage of its value
Like for like refers to the manner in which metrics are subject to adjustment in order to make them
directly comparable. Like-for-like adjustments are made in relation to annualised rent roll,
rate and occupancy and eliminate the effect of asset acquisitions and disposals that occur
in the reporting period
Net loan to value ratio is the ratio of principal value of total debt less cash, excluding that which is restricted, to
the aggregate value of investment property
Net operating income is the rental and other 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 flow on is an estimate of the rate of return based on operating cash flows and taking into
investment (geared) consideration debt
Operating cash flow on is an estimate of the rate of return based on operating cash flows
investment (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 accounting is the return obtained by a shareholder calculated by combining both movements in
return 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 cost of is the weighted effective rate of interest of loan facilities expressed as a percentage
debt
Weighted average debt expiry is the weighted average time to repayment of loan facilities expressed in years
Announcement date: 3 June 2019
Corporate directory
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 L Bennett
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
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Financial PR
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JSE sponsor
PSG Capital Proprietary Limited
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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
Date: 03/06/2019 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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