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Sirius Real Estate Limited Annual Report and Accounts 2022
Diversification
and growth
Sirius Real Estate Limited
Annual Report and Accounts 2022
Organic and
acquisitive
growthdelivering
attractivereturns
Sirius Real Estate Limited is a leading owner
and operator of branded business parks
providing flexible workspace in Germany
andthe UK.
Contents
Strategic report
1 Our purpose
2 Financial highlights
3 Operational highlights
4 At a glance
9 Investment review
12 Chairman’s statement
14 CEO’s Q&A
16 Business model
18 Our markets
22 Asset management strategy
24 Our portfolio
26 Key performance indicators
28 Asset management review –
Germany
34 Asset management review – UK
36 Sustainability
48 Financial review
54 Principal risks and uncertainties
64 Disclosures
Governance
66 Corporate governance
68 Board of Directors
70 Senior Management Team
71 Corporate Governance
80 Audit Committee report
86 Nomination Committee report
89 Sustainability and Ethics Committee
report
91 Directors’ Remuneration report
113 Statement of Directors’
responsibilities
114 Directors’ report
Financial statements
118 Independent auditor’s report
127 Consolidated income statement
127 Consolidated statement of
comprehensive income
128 Consolidated statement of
financial position
129 Consolidated statement of
changes in equity
130 Consolidated statement of
cash flows
131 Notes to the financial statements
177 Business analysis (Unaudited
Information)
184 Annex 1– Non-IFRS Measures
188 Glossary of terms
190 Corporate directory
Strategic report Governance Financial statements
1
Sirius Real Estate Limited Annual Report and Accounts 2022
Empowering business,
unlocking potential
Our purpose is to create and manage optimal workspaces that
empower small and medium-sized businesses to grow, evolve and
thrive. We seek to unlock the potential of our people, our properties
and the communities in which we operate so that, together, we can
create sustainable impact and long-term financial and social value.
OUR PURPOSE
For more information, please visit
www.sirius-real-estate.com
2
Sirius Real Estate Limited Annual Report and Accounts 2022
FINANCIAL HIGHLIGHTS
Organic and acquisitive
growth driving continued
strong performance
Diversification and balance sheet transformation
drivedividend growth
€168.9m
3.2%
Profit before tax at
31March2022
€2,074.9m
54.0%
Portfolio book value – owned
investment properties
4.41c
16.1%
Total dividend for the year
102.04c
15.5%
NAV per share
41.6%
Net loan to value ratio
107.28c
16.2%
European Public Real Estate
Association (“EPRA”) NTA per share
€74.6m
22.5%
Funds from operations at
31 March 2022
Throughout this Annual Report and Accounts
certain industry terms and alternative
performance measures are used; see the
Glossary, Business analysis and Annex 1 –
non-IFRS measures within this Annual Report
and Accounts for full explanations and
reconciliations of alternative performance
measures to IFRS numbers.
2022 107.28
2021 92.29
2022 74.6
2021 60.9
2022 102.04
2021 88.31
2022 41.6
2021 31.4
2022 2,074.9
2021 1,347.2
2022 4.41
2021 3.80
2022 168.9
2021 163.7
Strategic report Governance Financial statements
3
Sirius Real Estate Limited Annual Report and Accounts 2022
OPERATIONAL HIGHLIGHTS
The Company delivered its eighth
consecutive year of like-for-like
annualised rent roll growth in excess
of 5.0% in Germany with an increase
of 6.4% and a 7.6% increase in
annualised rent roll in the UK relating
to the 4.5 months of ownership of
BizSpace which it acquired in
November 2021. Taking into
account the effect of organic growth
and the impact of acquisitions and
disposals the Company’s total
annualised rent roll at 31 March 2022
amounted to €113.7 million in
Germany and £45.1 million
(€53.3million) in the UK. FFO
increased to €74.6 million from
€60.9 million leading to dividends
for the year amounting to 4.41c, an
increase of 16.1% on the prior year
based on a 65% pay-out ratio.
The Company issued two
corporatebonds in the year totalling
€700.0million which it used to fund
its German acquisition pipeline,
acquire BizSpace and repay a
significant amount of secured debt.
Whilst all of the above was
significantly accretive to earnings,
this has been transformational for
the Company’s balance sheet which
now includes 127 unencumbered
assets with a book value of
€1.6billion whilst its cost of
borrowing decreased to 1.4%
andweighted average debt expiry
increased to 4.3 years from
2.7years.
The Company continued its
acquisitive growth in Germany
through the commitment of
€201.9million into acquisition assets
that provide an attractive mix of
income and value add opportunity.
Inaddition, the Company entered into
a new market through the acquisition
of BizSpace and, as a result, added
72strategically located business
plans throughout the UK.
1. Organic growth across
both German andUK
platforms
3. Balance sheet
transformation through
bond issuances
2. Acquisitive growth
Organic and acquisitive
growth supported by
transformed balance sheet
The Company delivered profit before tax of €168.9 million
including €140.9 million in net valuation gains. The year ended
31 March 2022 was transformational for the Company withthe
issuance of its first corporate bonds preceding the entrance
into a new market with the acquisition of BizSpace in the UK.
The Company’s trading through the year continued to be strong
with like-for-like annualised rent roll growth of 6.4% recorded in
Germany and 7.6% recorded in the UK for the 4.5months
BizSpace was owned by Sirius. The strong performance in the
period resulted in a total accounting return of 20.0%. Dividends
for the year amounted to 4.41c, an increase of 16.1% on the
prior year based on a 65% of funds from operations pay-outratio.
4
Sirius Real Estate Limited Annual Report and Accounts 2022
AT A GLANCE
The Group’s assets contain space with a range of usages
including production, offices, warehouses and storage. Most
sites have a combination of anchor tenants which provide secure
long-term income, SME tenants on a combination of conventional
and flexible lease terms and Smartspace serviced tenants which
comprise a wide variety of companies and individuals using
self-storage, serviced office and workbox products.
The stability of the anchor tenants is important for income security
as the high-yielding Smartspace products, which are generally
created by transforming previously sub-optimal space, acquired
for very low cost, provide a substantial boost to income returns.
Sirius applies a high-return, value-add business model to
investments in industrial, warehouse and out of town office
properties in Germany and the UK. The Company derives value
through the execution of a stringent acquisitions process
followed by selective capital investment and the roll-out of an
intensive asset management plan which focuses on
transforming vacant and sub-optimal space into high-quality
conventional and flexible workspace. When assets have been
fully transformed they are either held for their stable income or
sold, with the proceeds recycled into opportunistic assets with
value-add potential.
Focus on Germany
As at 31 March 2022 in Germany the Group owned 69
wholly owned business parks comprising 1.8 million sqm
of lettable space. In addition, the Group managed two,
and held a 35% interest in seven additional properties
through itsTitanium venture with AXA IM Alts. The value
of ownedproperty in Germany held by the Group as at
31March2022 was €1.6 billion. The German portfolio
can be split into the following three categories, of which
rent roll contribution relates to the German rent roll only:
Traditional business parks
57.9%
of annualised rent roll
Modern business parks
25.2%
of annualised rent roll
Office buildings
16.9%
of annualised rent roll
We are an owner and operator
of branded business parks
providing conventional and
flexible workspace in Germany
and the UK
6
Sirius Real Estate Limited Annual Report and Accounts 2022
Our workspace
The Group has a well-diversified income and tenant profile from large multinational
corporations working within a broad range of industries to smaller SMEsand individual
customers. These tenants use several types of workspace on bothlong-term and
flexible leases. Much of theworkspace is created through the Company’s capex
investment programmes, which transform vacant and sub-optimal space into
high-quality conventional production, storage and office facilities, as well asour
innovative range offlexible Smartspace products.
As a result, the Company attracts awide variety of tenants and increases footfall on
itsproperties whilst generating higher income and capital growth from space that
would often have been considered structural vacancy and remain empty or be rented
at low rates.
Offices
The office space within the
German portfolio comprises office
areas and buildings on industrial
business parks, office buildings
attached to warehouses and
standalone office buildings in more
traditional office areas.
Within these office types we offer
awide range of conventional and
flexible office solutions on either
long or short-term leases. Some
business centres offer service
packages such as furniture, IT and
conferencing as well as co-working
areas and virtual offices.
Offices and co-working and office
space are securable in Sirius
business parks.
» Conventional offices
» Smartspace office
» Officepods
» Virtual office
» 39.2% of Group annualised
rentroll
» 33.7% of total sqm
» €7.76: average rate per sqm
Storage
For businesses and private
households, the wide range of
storage space on offer in the Sirius
estate provides many options on
varying scales.
Warehouse, storerooms and
self-storage options are available in
Sirius business parks.
» Classical storage spaces
» Smartspace storage
» Flexistorage
» 23.2% of Group annualised
rentroll
» 32.4% of total sqm
» €4.57: average rate per sqm
Production, warehouses
andworkshops
Large production areas form the
base of many Sirius’ business
parks; however, these are
complimented by smaller
workshop areas, which give clients
optionality asthey start their
businesses and as their business
needs change.
Additionally, the modern business
parks often have large warehouse
spaces which can be used for
many different purposes.
» Large-scale production spaces
» Warehouse spaces
» Smartspace workbox
» 17.6% of Group annualised
rentroll
» 20.9% of total sqm
» €4.72: average rate per sqm
AT A GLANCE CONTINUED
Strategic report Governance Financial statements
7
Sirius Real Estate Limited Annual Report and Accounts 2022
Modern business parks
Modern business parks typically
contain a combination of
warehouse and office buildings
across a site which is 20,000 sqm
or more. The quality and look of
the modern business parks are
usually of a higher standard and
whilst they are easier to manage
due to a higher proportion of office
space, the value-add potential that
can be extracted from the assets
within the Sirius business model is
usually still very good.
» Multi-tenanted
» Long and short-term leases
» Warehouse, storage and
officespace
» SMEs and individual customers
Office buildings
The pure office buildings we buy
are usually well located on the
periphery of major economic
centres and offer both
conventional and flexible office
space to SMEs and larger
corporates seeking a cost effective
alternative to city centre locations.
Our office buildings provide
high-quality space that can be
quickly adapted to meet the
changing needs and working
practices of our tenants.
» Single and multi-tenanted
» Office space
» SMEs
» Long and short-term leases
Traditional
businessparks
The majority of our traditional
business parks were originally
constructed by owner occupiers with
many having construction dates
going back to the early to mid-1900s.
Traditional business parks typically
comprise multiple mixed-use
buildings and contain in excess
of30,000 sqm of workspace.
Theoriginal design and set-up
ofthese sites was generally for
manufacturing and industrial
usage and over time they have
undergone significant investment
and have been reconfigured to
cater to multi-tenants use. After the
Sirius transformation, our traditional
business parks offer conventional
large-scale industrial, storage and
office facilities as well as flexible
serviced office, self-storage and
workbox options which are created
from the more difficult areas of the
sites. These business parks are
home to large blue-chip industrial
tenants such as GKN, Bopp &
Reuther and Borsig as well as a
significant number of SME and
individual tenants that together
create thriving business communities.
» Multi-tenanted
» Long-term leases
» Production, storage
andofficespace
» Large multinational companies
Strategic report Governance Financial statements
9
Sirius Real Estate Limited Annual Report and Accounts 2022
INVESTMENT REVIEW
Oberhausen
November 2021
Total acquisition cost
€39,843,000
Tenants
58
Lettable space
77,605 sqm
Occupancy
63%
Annualised rent roll
€3,218,000
Vacant space
28,680 sqm
Rate per sqm
€5.22
Frankfurt III
November 2021
Total acquisition cost
€21,245,000
Tenants
12
Lettable space
10,187 sqm
Occupancy
54%
Annualised rent roll
€849,000
Vacant space
4,696 sqm
Rate per sqm
€11.02
Heiligenhaus
October 2021
Total acquisition cost
€14,237,000
Tenants
5
Lettable space
45,100 sqm
Occupancy
77%
Annualised rent roll
€1,396,000
Vacant space
10,269 sqm
Rate per sqm
€2.44
Asset acquisitions in Germany
provide mix of income and value
add opportunity
Acquired in the period
Essen I
May 2021
Total acquisition cost
€10,706,000
Tenants
6
Lettable space
14,711 sqm
Occupancy
80%
Annualised rent roll
€829,000
Vacant space
2,897 sqm
Rate per sqm
€5.85
10
Sirius Real Estate Limited Annual Report and Accounts 2022
INVESTMENT REVIEW CONTINUED
Erfurt
November 2021
Total acquisition cost
€11,679,000
Tenants
7
Lettable space
22,333 sqm
Occupancy
81%
Annualised rent roll
€766,000
Vacant space
4,143 sqm
Rate per sqm
€3.25
Essen II
November 2021
Total acquisition cost
€12,151,000
Tenants
16
Lettable space
11,709 sqm
Occupancy
81%
Annualised rent roll
€954,000
Vacant space
2,248 sqm
Rate per sqm
€7.79
Öhringen
August 2021
Total acquisition cost
€9,023,000
Tenants
0
Lettable space
18,010 sqm
Occupancy
0%
Annualised rent roll
€nil
Vacant space
18,010 sqm
Rate per sqm
€nil
Neckartenzlingen
December 2021
Total acquisition cost
€34,485,000
Tenants
2
Lettable space
54,514 sqm
Occupancy
80%
Annualised rent roll
€2,196,000
Vacant space
10,705 sqm
Rate per sqm
€3.84
Acquired in the period continued
Strategic report Governance Financial statements
11
Sirius Real Estate Limited Annual Report and Accounts 2022
Rastatt
March 2022
Total acquisition cost
€8,783,000
Tenants
0
Lettable space
21,426 sqm
Occupancy
0%
Annualised rent roll
€nil
Vacant space
21,426 sqm
Rate per sqm
€nil
Düsseldorf III
March 2022
Total acquisition cost
€39,789,000
Tenants
21
Lettable space
34,310 sqm
Occupancy
55%
Annualised rent roll
€2,105,000
Vacant space
15,517 sqm
Rate per sqm
€9.33
Other additions
In September 2021, the Company acquired a land parcel
adjacent to its existing asset in Neuruppin for €500,000.
InMarch 2022, the Company acquired a building adjacent
toitsexisting asset in Potsdam for €827,500.
Disposals
On 29 October 2021, the Company notarised for disposal
abusiness park in Magdeburg for proceeds amounting to
€13.8million. The property comprises a net lettable area
of32,070 sqm and let to several tenants with occupancy
of69%and generating approximately €1.2 million of annual
netoperating income. The asset was classified as held for sale
asat 31March 2022 and completed on 1 April 2022.
On 3 March 2022, the Company disposed of a surplus car park
within its UK portfolio, generating proceeds of £1.2 million
(€1.5million).
On 16 May 2022 the Group exchanged contracts relating to
thesale of an asset in Camberwell, London for £16.0 million
(€18.9million). The multi-tenanted business park, which
comprises approx. 34,700 sq ft (3,224 sqm) of industrial and
office space, is 91%occupied. The sale is expected to complete
in July 2022.
Notarised in the period
12
Sirius Real Estate Limited Annual Report and Accounts 2022
CHAIRMAN’S STATEMENT
Building on
successfulfoundations
parks into higher-quality assets through investment and
intensive asset management. When sites are mature and net
income and values have been optimised, Sirius may refinance
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 to deploy the asset management
capabilities of the Company’s internal operating platform.
Germany
The capex investment programmes upgrade and transform
space that would often be considered as structurally void and,
in doing so, aim to deliver excellent returns by growing income
and capital values. The primary focus in Germany remains on its
seven largest cities of Berlin, Hamburg, Düsseldorf, Cologne,
Frankfurt, Stuttgart and Munich, with a secondary focus on a
selection of key towns such as Aachen, Saarbrücken and
Freiburg which benefit from cross-border opportunities. Sirius
seeks mixed-use properties, primarily light industrial units,
business parks or office buildings outside city centres or on the
edge of towns where there is a high density of commercial and
industrial activity and good transport links. The Company has
approximately 6,000 tenants across Germany representing a
wide range of industries. The Company also manages seven
business parks owned by Titanium, a venture with AXA IM Alts
where Sirius holds a 35% equity share.
United Kingdom
BizSpace is a natural fit for Sirius and provides the combined
business with opportunities for meaningful operational and
financial synergies. Like Sirius’ German business, BizSpace
primarily owns out of town offices and industrial assets with
similar characteristics. We see significant organic growth
potential in rental pricing and other opportunities in intensive
asset management , particularly given the high level of
exposureto the regions where the UK Government’s levelling
up initiatives are being focused. In the UK, we expect acquisition
opportunities to come primarily from portfolio acquisitions or
consolidation rather than acquiring single new assets which
aregenerally much smaller than those available in Germany.
BizSpace owns and operates 72 sites, across 4.3 million sq ft
providing a range of office, studio and workshop units to the
SME sector in convenient locations across the UK.
Shareholder returns
Reflecting the continued robust operational performance and
the strength of the Company’s balance sheet, the Board has
authorised a dividend in respect of the second half of the
financial year ended 31 March 2022 of 2.37c per share
representing 65% of FFO, an increase of 19.7% on the 1.98c
dividend for the equivalent dividend last year. This brings total
dividend for the year to 4.41c compared to 3.80c for the year
ended 31 March 2021 and reflects an increase of 16.1%.
Overview
This is my fourth Annual Report as Chairman and I am pleased
to record another period of operational and strategic success
for the business despite the continued disruption and challenges
that have arisen from the Covid 19 pandemic, and more latterly,
the inflationary environment which has been exacerbated by the
conflict in the Ukraine. I would like once again to express my
thanks to the management and employees who continued to
operate with such resilience when servicing our tenants and
executing the Company strategy in the most challenging
circumstances. Notably, this year the business entered the UK
market with the acquisition of BizSpace and I am delighted to
welcome all our employees in the UK to the wider group. I have
absolute confidence in the ability of the management teams in
Germany and the UK to ensure the ongoing integration process
is successful, as well as to unlock new growth opportunities in
the UK. Undoubtedly lots of that work still lies ahead and I look
forward to reporting back on progress next year.
Looking forward, Sirius is well placed to keep delivering on
ourgrowth strategy. Our primary focus remains on our largest
market, Germany, where we expect to continue to deliver
attractive and sustainable returns for shareholders there.
Theyear ahead looks set to be shaped by the fallout from the
conflict in the Ukraine. Whilst premature to speculate on how
the crises will impact our markets, the Company considers itself
well positioned to trade through any potential headwinds and,
most importantly, we all hope for an immediate cessation of
hostilities and de-escalation of the conflict.
Executing the strategy
Our core strategy continues to focus on the acquisition of
business parks in Germany which have either attractive yields
orvalue-add potential or both. Sirius transforms these business
Strategic report Governance Financial statements
13
Sirius Real Estate Limited Annual Report and Accounts 2022
“ The team are deploying
theirexperience and asset
management expertise across
both markets and in doing so are
delivering results both organically
and through acquisitions.”
to them and the recognition of the value they will bring to our
combined team. People are core to our business success, and
we will continue to develop our approach to creating a positive
social impact, both inside and outside the company. This
includes working with our tenants. I am pleased that the tenant
survey we conducted this financial year showed they recognise
the efforts we made for them and the support we implemented
throughout the pandemic. Our purpose is to empower small
and medium-sized business to grow and to unlock the potential
of our people and our properties. With the support of our
people and all our stakeholders, I can say with confidence we
have achieved our purpose again this year.
Governance and culture
On 1 September 2021, we welcomed Joanne Kenrick to the
Board as an independent Non-Executive Director. Joanne brings
a wealth of commercial marketing experience to the Sirius
Board with extensive listed, private and charitable board
experience and has already provided valuable contributions
throughout the year. I am pleased that the Sirius Board now has
a better gender balance with three female appointees in place
which we have already appointed or are about to be appointed
to the important roles of Chairs of the Audit and Remuneration
Committees and as the Senior Independent Director.
I would also like to congratulate Diarmuid Kelly, who was
promoted to the Board to be Chief Financial Officer, taking over
from Alistair Marks, who we are pleased remains with us on the
Board in a new role as Chief Investment Officer. Further information
relating to these Board changes is provided in the Corporate
Governance Report on page 72 and in the Nomination
Committee report on page 86.
The Board is fully committed to compliance with the UK
Corporate Governance Code as published in July 2018 by the
Financial Reporting Council (the “2018 Code”). Under a
dispensation issued by the Johannesburg Stock Exchange, the
Company is not required to apply the King IV Code on
Governance™ for South Africa 2016. A detailed description of
our governance and leadership arrangements and how we have
complied with the principles and provisions of the 2018 Code
isprovided in the Corporate Governance Report on pages 71
to79. This includes an explanation of the link between the
Board’s decision-making and the Group’s purpose and strategy.
Italsodetails how stakeholder interests and the other matters
set out in Section 172 of the UK Companies Act 2006 have
been considered in the Board’s discussions and decision
making. Information on the Group’s culture can be found on
page 72 ofthe Corporate Governance Report.
Outlook
On behalf of the Board, I would like to thank all those connected
with Sirius for their hard work which has allowed the Company
to record another strong year, with the business continuing to
execute its strategy effectively and further building on the
successful foundations that have been laid over the last decade.
The leadership team has performed extremely well through the
Covid-19 pandemic, and this gives me every confidence of its
ability to deliver returns in both good and more challenging
times. Following the issuance of two corporate bonds which
resulted in a reduction of its weighted average interest rate
to1.4% and extension of its weighted average debt term to
4.3years Sirius is in a strong position to continue to execute
onits ambitious growth strategy in both Germany and the UK.
Daniel Kitchen
Chairman
10 June 2022
The Sirius business model continues to deliver not only
progressive income returns but also attractive capital growth
asmeasured by adjusted net asset value (“adjusted NAV”)
pershare. Combining the growth in adjusted NAV and taking
into account dividends paid in the period, the Company has
delivered a total shareholder accounting return of 20.0% for the
year to 31 March 2022. While dividend distributions have
typically contributed approximately one third and adjusted NAV
growth two thirds of returns, it is pleasing to note that the
valuation movement of our investment properties continues to be
derived predominantly from organic increases in income rather than
yield movement. The consistent delivery of impressive double digit
accounting returns is a testament to the continued excellence of
our people who continue to execute our core strategy that focuses
on growing income at property level and selective asset recycling.
Sustainability
We have continued to develop our approach to sustainability
and ESG as we look to further embed environmental and social
value within the business, with the Board and Senior Management
Team leading on this important topic. We have made significant
progress, but also recognise that we have more to do, in
particular as we start our journey of reducing our environmental
footprint with the ambition of having an overall positive impact
on the planet and society. I would like to thank Kremena Wissel,
our Chief Marketing and Impact Officer, and her team for their
work, which now also includes the integration of BizSpace into
our ESGprogramme.
During the year we have started to implement the core drivers
of our sustainability programme that were identified through the
ESG materiality assessment exercise completed in early 2021.
We have provided more details on our ESG objectives and
actions within this annual report, and we are aiming to provide
additional insight into our ESG strategy, roadmap and targets in
our first standalone ESG Report later in 2022. We have
recognised our responsibility to the environment for a number
of years, evidenced by us providing 100% certified green
energy to over 94% of our portfolio. This year we are going
further and have started on our journey to become a net zero
emissions business, as identified in our implementation of the
Task Force on Climate-Related Financial Disclosures (‘TCFD’).
As we have made clear before, our ESG decisions will be
grounded in economic viability. As such, we have recently given
permission for a detailed structural and emissions assessment
of a sample of our portfolio which will give the management
team the necessary information to make informed operational
and financial decisions towards taking the business forward on
its net zero emissions pathway.
Our strength this year is best evidenced, yet again, by our
employees. For the second year, the Covid 19 pandemic had
the potential to disrupt our operations, however our employees
embraced the challenge and delivered across the whole
business. I have also been fortunate to be able to visit
BizSpace’s buildings and meet as many of the team as possible.
I hope that I was able to adequately demonstrate our welcome
14
Sirius Real Estate Limited Annual Report and Accounts 2022
CEO’S Q&A
A year of growth and
transformation
In the UK, the acquisition of BizSpace provides a fantastic
opportunity to enter this new market in one significant
transaction. It also enables the Group to capitalise on both
structural tailwinds offered by the trend towards onshoring
ofsupply chains and the growth of trade-commerce, as well as
the political impetus in the UK towards levelling up regional centres.
Importantly, we acquired a business with strong earnings adding
to our FFO goal and a ready-made platform that can form the
basis of growth going forward. Moreover, we see significant
organic growth potential in rental pricing, and opportunity to
adopt further intensive asset management learning from our
experiences in Germany over the last decade.
BizSpace complements Sirius’ existing platform well and we’re
seeing meaningful operational and financial synergies bearing
fruit. There are common opportunities in the asset class across
Germany and the UK with growing demand and shortening
supply in both markets. In the UK our future growth
opportunities are likely to come from future consolidation rather
than acquiring single new assets, largely due to the average size
of individual assets being typically smaller than those in Germany.
We’re delighted to have welcomed the BizSpace team to the
wider Group and we look forward to growing together across
these two important markets.
How is the commercial real estate market
evolving across Germany and the UK?
Across both markets the common denominator for the asset class
that we are involved in is growing demand and shortening supply.
In Germany, this increase in demand is being driven by light
industrial manufacturers reorganising their supply chain. These
businesses are bringing supply chains closer to their centres of
operation and end customers, increasing flexibility and reducing
dependence on just in time supply chains in favour of “just in
case” – placing an increased focus on resilience and adaptability.
Regardless of current global uncertainties Germany also
remains a safe haven for business and investment, and the
“Mittelstand” companies that form the backbone of the nation’s
economy remain strong. All told, this iscontributing to growing
demand for out of town and edge oftown industrial space.
In the UK, demand remains strong and supply tight, but the
drivers of this are more complex. Firstly, as in Germany
businesses are looking to onshore their supply chains and
reduce dependency on long, more fragile systems. In the UK,
this is compounded by the effects of Brexit.
Politically, the focus on “levelling up” regions across the UK is
placing greater emphasis on smaller commercial and industrial
centres, and investment in out of town spaces. Equally,
consumer trends underpin growing demand for commercial
real estate. The rise in e-commerce means greater need for
logistics and fulfilment centres close to customers. At the same
time, consumers are ever more environmentally conscious and
increasingly seeking to purchase from suppliers with shorter
supply chains.
What are the key opportunities for Sirius
following the BizSpace acquisition?
I want to start by echoing the Chairman’s remarks expressing
gratitude to our employees for their efforts and commitment
over the past year as well as welcoming BizSpace’s employees
to the team. In what have continued to be uncertain circumstances
Sirius has performed strongly and taken numerous significant
steps forward. So, thank you to all of you.
We see significant opportunities for growth across the Group,
not least in Germany, which remains our largest market. We will
continue to focus on growth asset by asset as we have for many
years. Our primary focus remains cementing our critical mass
around Germany’s “big seven” cities, with a secondary focus on
a selection of key border towns where we can reap the benefits
of markets on both sides of the border.
Strategic report Governance Financial statements
15
Sirius Real Estate Limited Annual Report and Accounts 2022
the performance of the business. As a result of this work, we
willbe publishing our first standalone ESG Report later in the
current financial year as we want to provide an even greater level
of transparency and data behind our ESGprogramme.
This year we also completed a detailed study of embodied
carbon within our supply chain as we refurbish and modernise
our buildings. We are now starting to use this data in our dialogue
with suppliers and in our refurbishment programmes to reduce
our overall carbon footprint. We have continued our roll-out of
smart-meters and LED lights across the business and have
centralised the collection of all our waste to allow us to better
manage and reduce carbon emissions, improve recycling and
reduce waste to landfill. All these actions will be brought together
in a detailed assessment we commissioned towards the end of
the financial year based on modelling a sample of our buildings to
understand the operational and financial implications of bringing
our portfolio towards net zero for our Scope emissions. I am
pleased to report that we will achieve net-zero for our Scope 1
and 2 emissions in Germany this year, as a first step in our
emissions reduction journey. We have also implemented a
biodiversity programme to improve our positive impact across
the 500,000 sqm of green spaces we have in Germany.
We have always said that Sirius is about where people meet
property and following another year of Covid-19 related
disruption, our people have excelled again. We have continued
the roll-out of our purpose and values across the business and
these have clearly played a role in how we have grown the
business. Thisroll-out is now being extended to BizSpace.
Wehave also built on our engagement with tenants and were
encouraged by the results of the tenants survey we completed
during the year. Yet again, we have looked externally and
worked with our local communities to support them where
possible and linked with causes we identify with.
In summary, it has been a year in which we have grown our
sustainability programme and we have started to integrate it
into BizSpace since the acquisition. I look forward to giving our
stakeholders more information on our progress later in the year.
What can we expect for the year ahead?
This has been a fantastic year for Sirius and we’re looking
forward to continuing in this same vein. In the immediate term
we will continue the process of integrating BizSpace from a
wider asset management and strategic perspective. We expect
to see the full year benefit to earnings from the acquisition of
BizSpace in the new financial year, and I look forward to
updating on this in due course.
In last year’s Annual Report, I closed by restating our goal to
increase our funds from operations to €100.0 million. Now that
target is within reach we will look to surpass this goal and begin
on our journey towards €150.0 million FFO. We’ll achieve this
through growth, both organic and acquisitive. By remaining
agile and opportunistic we are confident in our
ability to grow
across both markets in which we operate, underpinned
by our
continued commitment to intensive asset management.
As we continue to process of putting the pandemic behind us,
Iand the rest of the management team are also looking forward
to getting out on the road more often and meeting with our staff
in the field, our tenants and our investors face to face. It continues
to be a privilege to lead this business and its team of commited
high-performing employees.
Andrew Coombs
Chief Executive Officer
10 June 2022
In the office market in both countries, we are also positioned
well to benefit from any tightening of belts required following
the rising costs affecting the whole of Europe given our typically
lower price points and also the desire to work closer to home
and with easy access compared to town centres.
Finally, as the economic environment moves to one
characterised by inflationary concerns and interest rates
increases I believe Sirius’ strong financial profile, agility in
approach and proven operational excellence will continue
toprovide opportunities for future growth.
What are your key highlights from the
financialyear?
Alongside two major milestones for the business, this has been
another year of growth for Sirius across our key operating metrics
and we have maintained high cash collection rates. We have
continued to execute our strategy effectively, building on the
successful foundations we have laid over the past decade.
One of the major milestones of the year was the complete
transformation of our balance sheet with two corporate bond
issuances amounting to €700 million. These reduced our
weighted average cost of debt to 1.4% and extended the
weighted average term of debt out to 4.3years.
The second major event was adding BizSpace to the Group, in a
transaction which was supported by a successful equity raise,
undertaken at a significant premium to the last reported net asset
value per share and for which there was very strong demand.
Beyond this, we have deployed or committed to over €200million of
on balance sheet acquisitions, adding to our portfolio of spaces
across Germany as we continue to focus on developing our
pipeline and taking advantage of the opportunities available in
the market. In our existing portfolio in Germany we have also
delivered organic like-for-like rent roll growth to 6.4%, representing
the eighth consecutive year of growth in excess of 5%.
As such, we have been able to increase our FFO to €74.6 million,
and our shareholders have been able to enjoy double digit
accounting returns as they have for the past seven years.
Financial performance is just part of the picture, however. ESG
continues to be a significant focus for the leadership team and
the Company has been working hard to progress our strategy
and agenda as evidenced within the Annual Report and
Accounts 2022.
All told, the past financial year has been one of the most
successful and significant for Sirius, and I’d like to extend my
thanks once again to our fantastic team for its efforts in
enabling this success.
How has Sirius’ sustainability agenda
progressed over the past year?
We take our responsibility to the environment extremely seriously
and fully recognise its importance. It is fair to say that our
concentration on sustainability and the drivers of ESG has
increased over the last two years and the progress we have
made this year reflects this. At the same time, as the chairman
has mentioned, our approach to ESG is based on sound
economic management principles of insight, planning and the
need to generate long-term financial returns as well as doing
what is right for all our stakeholders. This takes time to do
properly and we fully recognise we have more to do as we look
to embed ESG into our operations and financial planning.
Through the end of the last financial year and the beginning of
the year under review, we completed our first assessment
looking at the material drivers of ESG for the business. We will
build on this process, but it has already provided us with the
platform to develop an ESG programme linked more closely to
16
Sirius Real Estate Limited Annual Report and Accounts 2022
BUSINESS MODEL
Property powered
by our platform
Our platform
The Sirius operating platform offers a number of
benefitsincluding direct sourcing of new asset acquisition
opportunities, reduced reliance on commercial agents
and local brokers, higher cost recovery, greater lead
generation and more efficient new tenant acquisition,
andincreased optionality in terms of space configuration,
as well as enhanced control, focus and speed in developing
space. Taken as a whole this means lower risk and
higherreturns.
Key drivers
Capital efficiency
Sirius intends to grow the portfolio with accretive acquisitions
which have been funded historically through new equity,
refinancings or disposals of mature or non-core assets.
Favourable marketenvironments
The German economy is the largest in Europe and its
Mittelstand (SME) market is particularly deep, meaning
demand for both the Group’s conventional space and
flexible workspace continues to be high. The UK
commercial real estate market is characterised by
growing demand and shortening supply, driven by
complex long-term tailwinds including nearshoring of
supply chains and shifting consumer demand.
People
The Company is internally managed and relies on its
employees and their experience, skill and judgement in
identifying, selecting and negotiating the acquisition and
disposal of suitable properties, as well as the development
and property management of the portfolio when owned.
Strong management capabilities
Sirius has a highly experienced Senior Management Team
with a strong track record of in the German and UK property
markets, through both good and difficult economic
conditions. The team is able to leverage its strong market
connectivity and track record of acquiring assets to access
a large number of potential investment opportunities.
Value created for ourstakeholders
Sirius specialises in the ownership, development and operations
of business parks throughout Germany, and more recently
through its acquisition of BizSpace, the UK. What makesSirius
different is its best-in-class operating platform and intensive
asset management programme. Combining the Sirius property
portfolio with our unique operating platform gives us a range of
advantages in the market which enable the delivery of strong
and consistent returns for shareholders.
Sirius harnesses its in-house asset and property management
platform through a stringent acquisitions process. This is
followed by an intensive capital investment and asset
management plan which focuses on transforming vacant
andsub-optimal space into high-quality conventional and
flexible workspace.
Strategic report Governance Financial statements
17
Sirius Real Estate Limited Annual Report and Accounts 2022
Value created for ourstakeholders
Sirius’ cycle
Enhancing rental and capital value through active portfolio management.
Value creation
Intensive asset
management
» Acquisitions and disposals
assessment and execution
» Strong banking relationships
» Detailed asset-level business
plans
» Advanced IT systems
Active tenant and lettings
management
» Sophisticated internet-based
marketing
» Substantial marketing and
salesteams
» Structured sales process and
mystery shopping
» Comprehensive customer
database
Transformation and
conversion of space
» Utilisation of structural vacancy
» Highly accretive capex
investment programmes
» Experienced development team
Asset recycling
» Recycling of capital from
matureassets into assets
withvalue-add potential
» Adding to capex investment
programmes
» Developing and selling
surplus land
Conventional
workspace
» Long term
» Large scale
» Production
» Storage
Flexible
workspace
» Long and short term
» Office
» Production
» Storage
Ancillary
services
» Conferencing
» Catering
» Internet and telephony
» Virtual office
A
c
q
u
i
r
e
T
r
a
n
s
f
o
r
m
R
e
c
y
c
l
e
M
a
n
a
g
e
Anchor
customers
Start-
ups
SME
customers
Conventional
workspace
Ancillar
y
services
Flexible
workspace
People Shareholders Local communities Suppliers Employees
18
Sirius Real Estate Limited Annual Report and Accounts 2022
OUR MARKETS
Occupier demand and structural
changes drive investment into
light industrial assets
Introduction
Sirius continues to operate largely in Germany where it owns
and manages a well-diversified portfolio of mature business
park assets, as well as those where there is an opportunity to
add value through asset management. This year the Company
also acquired BizSpace, a leading provider of regional flexible
workspace across the UK, offering light industrial, workshop,
studio and office units to a wide range of businesses. The
acquisition complements Sirius’ existing platform and allows for
meaningful operational and financial synergies. Sirius’ portfolio
in the UK and Germany continues to increase in size through a
combination of organic and acquisitive growth underpinned by
the Company’s internal operating platform.
In Germany, the primary focus is to build a “critical mass” around
its “big seven” cities of: Berlin, Hamburg, Düsseldorf, Cologne,
Frankfurt, Stuttgart and Munich. The Company has a secondary
focus on a selection of key border towns where we can reap the
benefits of markets on both sides of the border and the
periphery of the “big seven” cities. The Company provides in the
region of 1.8 million sqm of manufacturing, storage and office
space. To maximise the utilisation of space, Sirius has
developed a range of high-yielding products including serviced
offices, self-storage and workboxes which have their own
Smartspace brand and are particularly popular with tenants
seeking flexible solutions to their accommodation needs. The
products are usually created through investment into space that
other owners may regard as a structurally void and then using
the capability of the in-house sales and marketing teams to let
these at premium rental rates. The Company’s tenant base is
diverse ranging from multinational corporations and
government agencies to SMEs within the German Mittelstand
and individual tenants.
In the UK, BizSpace is a leading provider of regional flexible
workspace. Offering office, studio and workshop units to a wide
range of businesses in convenient regional locations. The
Company provides in the region of 4.3 million sq. ft across 72
sites. The business provides Sirius with a unique opportunity
toenter, at scale, an under-served wider UK market with the
one-step acquisition of an established platform. Additionally,
itprovides Sirius with a high-quality portfolio in a supply
constrained market and offers significant organic growth
potential in rental pricing. BizSpace’s tenant base is similarly
diverse, ranging from multinational businesses to
manufacturing-focused SMEs and individual tenants.
The German market
Germany remains comfortably the largest economy in the
European Union and the fourth largest in the world after the
USA, China and Japan. It has maintained its reputation as an
industrial powerhouse with a strong export-focused economy
characterised by low unemployment. Relative to many other
European economies Germany performed well through the
Covid-19 crisis and, notwithstanding the impact of recent
events in Ukraine and related economic effects, is projected
to grow strongly in 2022. At the time of writing, which was
before the material escalation of events in Ukraine, the OECD
predicted 4.1% GDP growth in 2022 andafurther 2.4% in
2023.
(1)
It expects a strong potential rebound in manufacturing
if supply restraints begin to recede, with interest rates and
unemployment projected to remain relatively low. Following
more recent events in the Ukraine it is clear forecasts of
economic growth will need to be revisited with many
commentators pointing to significant inflationary pressure
particularly in relation to utilities and the likelihood of interest
rate increases.
Commercial real estate transaction volumes in Germany
in2021 were €64.1 billion according to BNP Paribas; this
isthe second highest year recorded, which demonstrates
remarkable underlying resilience given the disruptive factors
the market faced in 2021 such as supply bottlenecks for
primary products, the rise in inflation and the ongoing
challenges presented by Covid-19 and the conflict in Ukraine.
Once again, the majority of sales volume was registered in
and around Germany’s seven major cities (Berlin, Düsseldorf,
Frankfurt, Hamburg, Cologne, Munich and Stuttgart), totalling
€37.1billion, exceeding the prior year by 14%. Unsurprisingly
Berlin leads the way with €11.2 billion invested, the second
highest total on record and up 25% on the previous year.
Munich follows with €7.7 billion recorded, up 53% on the
previous year. Frankfurt follows in third place with just under
€6.7billion, roughly similar to the previous year. Cologne
recorded the strongest growth, up 182% to €3.8 billion.
Incontrast there were declines on the previous year’s
performance in Hamburg at €3.1billion (-43%) and Düsseldorf
at €2.4 billion (-34%). Looking at investment types, offices
remained the top performer, with approximately €30.7 billion
of investments; around 48% of transaction volume is attributable
to this class. Logistics properties followed with a volume of
just under €9.9billion; this is an increase of almost 25% on
2020, setting an all-time high. Foreign investors were
responsible for around €24.8 billion of capital investment,
around 39% of total investment levels – at a similar level to
last year.
(2)
Strategic report Governance Financial statements
19
Sirius Real Estate Limited Annual Report and Accounts 2022
Looking closely at economic data examining Germany’s so
called “Unternehmensimmobilien” – a distinct asset class of
German multi-use and multi-let commercial properties, that is
home to the heart of the Germany economy – we can see a
strong recovery in the sector in the first half of 2021. A new
record was set in H1 with an investment volume of around
€2.9billion, an increase of 87% compared with the previous half
year. Some of this activity was likely due to a “catch-up effect”
from the previous year’s disruption. Looking at the different
categories that make up the Unternehmensimmobilien we can
see that business parks are the most in-demand category,
accounting for a significant 48% of total volume.
Light manufacturing properties are the second most in-demand
category, at23%; notably this is the only property type among
the Unternehmensimmobilien that can point to a volume of
take-up in the first half of the year that is above the average of
the past five years, exceeding it by around 16%. Demand for
warehouse properties was much lower, at just 4,000 sqm.
Looking at specific sectors more closely we can see that
manufacturing remained an extremely important driver of
demand for space, demonstrating the robustness of the sector.
Accounting for 30% of total take-up, exceeding its average by
around 9%. Some clear regional trends emerged in the first
halfof 2021. Munich and the surrounding area accounted for
one-third of thetotal transaction volume with €934 million. The
Rhine-Ruhr conurbation follows, accounting for €378million in
volume, and the West region registered the third highest
volume at €375million.
(3)
The Unternehmensimmobilien has
been resilient as an asset class during past major economic
events and recessions and appears to have maintained
resilience through Covid-19 too. This is due to multiple factors
such as the flexibility and diversity inbuilt within multi-tenanted
business parks, the tendency for companies engaged in
production and manufacturing to respond to economic
contractions by reducing output rather than space and the
depth of the Mittelstand market – these factors all contribute
tothe ongoing growth and stability of the asset class.
Commercial real estate transaction volumes
in Germany in 2021
€64.1bn
Seven major cities attracted the majority
of capital with around
58%
of transaction volumes
(1) https://www.oecd.org/economy/germany-economic-snapshot/.
(2) https://www.realestate.bnpparibas.de/en/market-reports/
investment-market/germany-at-a-glance.
(3) https://initiative.bulwiengesa.de/unternehmensimmobilien/sites/
default/files/2021-11/IUI_Marktbericht15_20211109.pdf.
20
Sirius Real Estate Limited Annual Report and Accounts 2022
OUR MARKETS CONTINUED
Entering into the UK market
through the acquisition
ofBizSpace
The UK market
The UK economy bounced back strongly in 2021 with growth
registered at 7.5%, despite falling back in December due to
new restrictions to manage the Omicron variant. Prior to
theescalation of events in Ukraine, the OECD pointed tothe
UK economy growing by a further 4.7% in 2022 with business
investment set to improve when compared to recent years
asthe country adapts to the new post-Brexit environment.
(4)
The OECD pointed to unemployment continuing to fall, and
inflation is set to slow, heading back towards the 2% target by
the end of 2023. Following more recent events in Ukraine it is
clear forecasts of economic growth will need to be revisited,
with many commentators pointing to significant inflationary
pressure particularly in relation to utilities and the likelihood
ofinterest rate increases.
As a result the prospects for growth in the commercial real
estate sector and in the UK regions remain uncertain despite
supply constraints due to a lack of land and increased
building costs driving rental growth. Looking back to 2021,
quarter four of 2021 saw commercial property in the United
Kingdom record its best single-quarter total return since
quarter four of 2009. A quarterly return of 6.3% drovethe
rolling annual total return of the MSCI UK Quarterly Property
Index to 16.5%, a six year high. However, while previous
cyclical upswings saw the main property sectors move in
relative unison, the current cycle is largely driven by the
strength of industrial property. Of the 16.5% annual index
return, 12.9% could be attributed to the industrial sector
courtesy of a 36.4% total return. Yield compression was the
main driver of industrial outperformance as its equivalent
yield effectively halved in ten years as it strengthened to 4.2%
at the endof 2021 from 8.4% in quarter four of 2011. The
combined impact of a strengthening yield and rental growth
saw industrial become the largest sector by value in the Index
at 35%, up 2.3x over ten years.
(5)
In its 2022 cross-sector
outlook published prior to the escalation of events in Ukraine
and agnostic of the related economic impact, Savills also
noted that regional office markets saw upward pressure on
pricing in 2021 and it expects this to continue into 2022 and
beyond, noting that some regional office markets
lookundersupplied.
(6)
(4) https://www.oecd.org/economy/united-kingdom-economic-
snapshot/.
(5) https://www.commercialsearch.com/news/uk-industrial-property-
surged-in-2021-as-median-total-return-topped-30/.
(6) https://www.savills.com/research_articles/255800/323301-0.
“ Notwithstanding the effect of
macro economic factors that
have more recently impacted
markets, the prospects for
growth in the commercial real
estate sector and in the UK
regions continue to be strong,
with supply constraints due
toalack of land and increased
building costs driving
rentalgrowth.”
21
Sirius Real Estate Limited Annual Report and Accounts 2022
Financial statementsGovernanceStrategic report
22
Sirius Real Estate Limited Annual Report and Accounts 2022
ASSET MANAGEMENT STRATEGY
Continuing to deliver
on our strategy
Our core strategy
The Group’s core strategy is the
acquisition of business parks
across Germany and the UK that
provide a mix of stable income
and value-add potential which
allow the Group to deliver
consistent and attractive
risk-adjusted returns for
shareholders. The Group’s
strategy is executed through its
internal operating platform that is
responsible for the investment
into vacant space and roll-out of
arange of intensive asset
management initiatives. Once
mature, assets will either be held
to provide stable income, or sold
with the capital recycled into new
value-add opportunities.
In addition the Group holds a 35%
interest in the Titanium venture
with AXA IM Alts that provides
theCompany with an alternative
source of capital and exposure
toassets with differing return
characteristics than those held
onits own balance sheet, as
wellas income from its asset
management services.
Active portfolio management
Sirius grows income and the capital value of
itsassets through active asset management
throughout the period in which they are
owned. The Group’s internal operating platform
is focused on key drivers such as property and
tenant management, new lettings, service
charge recovery, lease management, tenant
renewals and debt collection.
Sirius’ asset management initiatives are
designed to convert properties into sustainable,
more efficient and higher-yielding conventional
and flexible workspaces.
Transformation and
conversion ofvacant space
The Company’s extensive capex investment
programmes continue to deliver exceptional
returns and remain key drivers of organic
income and capital value growth. The
programmes are focused on converting vacant
or sub-optimal spaces like excess office space,
redundant halls and basements into both the
Group’s conventional and Smartspace flexible
workspaces. The investment also includes
upgrading common and outside areas as
wellas branding sites. Often amenities like
conferencing rooms, canteens and fitness
centres are created on site and let to external
operators which increases footfall and overall
attractiveness of the properties.
The returns that the Company achieves from
these improvements are high as typically they
not only deliver rental income and service
charge recovery gains that come from letting
the transformed areas but also include
significant valuation uplifts that come from
improving the space and business parks as
awhole. The capex investment programmes
commenced in January 2014 focusing on
assets already owned by the Company and
extended to include assets that were acquired
after April 2016. In total, the capex investment
programmes have transformed over 380,000
sqm of sub-optimal or vacant space. Returns
from the programmes have been highly
impressive with an investment of €58.5 million
generating €24.3 million of annualised rent roll
based on occupancy of 78% at 31 March 2022.
In addition the Company actively seeks out
opportunity to make accretive investment into
space that has been recently vacated or is due
to be vacated in order to capture reversionary
value whilst enhancing the value of the space.
Link to risks
see pages 57 to 63
1
5
6
8
9
10
11
Link to risks
see pages 59 to 63
5
11
1 2
Our five value drivers
23
Sirius Real Estate Limited Annual Report and Accounts 2022
Financial statementsGovernanceStrategic report
Our five value drivers
Occupancy and rentalgrowth
The internal asset management platform
remains a key differentiator for Sirius over its
competitors and plays an integral role in driving
occupancy and rental growth. In Germany, the
internal marketing team has developed a
significant internet presence over the last ten
years and consistently drives an average well in
excess of 1,000 leads per month predominantly
from the Company’s website and the internet
portals on which vacancies are advertised.
Once leads have been generated, a dedicated
call centre immediately deals with all enquiries
and converts approximately 77% of all
enquiries into viewings. The on-site sales
teams follow a structured sales process and
are incentivised through the setting of asset
specific lettings targets.
All aspects of the Company’s sales process aswell
as those of many of its competitors aremystery
shopped in order to measure performance and
ensure standards are continually met. This
highly specialised in-house capability enables
the Company to secure and retain tenants
without reliance on external agents and brokers
and is the key behind being able to realise the
full potential of the transformed vacant space
that is created through the capex investment
programmes. As part of its acquisition of
BizSpace the Company acquired an existing
platform that is expected to be enhanced as
part of the wider integrationprocess.
Improvement in service
charge recovery
Poor recovery of service charge costs in
mixed-use, multi-tenanted business parks
typically results in high leakage from net
operating income. Over the last ten years, the
Group has invested substantially in building
anin-house team that is entirely focused on
optimising service levels and costs as well as
improving service charge recovery levels.
These investments include the following:
» developing utilities metering and
consolidating purchasing power to negotiate
better utilities deals and improve
consumption allocation;
» creating detailed equipment lists and
matrices to manage maintenance
programmes better and improve allocation;
» increasing service charge prepayments to
reduce the need to chase balancing
payments at the end of each year; and
» improving the overall cost allocation and
recovery process.
The Company has developed the ability to
achieve a cost recovery percentage that is higher
than occupancy, which it believes represents
best-in-class performance.
Growth through acquisition
and recycling
Sirius actively seeks to grow its portfolios in
both Germany and the UK through acquisitions
which are typically funded through a
combination of share placings, attractively
priced financing and the selective recycling of
equity out of mature or non-core assets. In
order to establish and maintain a balanced
portfolio, both opportunistic and stable assets
have been acquired, providing the Company
with an attractive combination of secure
income and the potential to create significant
value by utilising the abilities of our internal
operating platforms. The Company’s Titanium
venture with AXA IM Alts provides additional
growth and income potential for the Company
as the relationship develops and new
investment opportunities are considered.
Link to risks
see pages 60 to 62
6
9
10
Link to risks
see pages 59 to 62
5
6
8
10
Link to risks
see pages 57 to 63
1
2
3
4
7
10
12
3 4 5
24
Sirius Real Estate Limited Annual Report and Accounts 2022
OUR PORTFOLIO
Strategy in action
Modern business park Alzenau
–acquired December 2019
Strategy in action
» Well-located mixed-use business park located to the east of
Frankfurt totalling 59,925 sqm including 3,897 sqm of vacant
space at an EPRA net yield of 7.8%
» High-quality and modern park which houses two long-term
anchor tenants
» Financed by a five year facility at an interest rate of 1.34%,
maturing in December 2023
» As at 31 March 2022 rent roll has increased to €4.8 million
asa result of increasing average rates
» Total return of €19.8 million equating to a geared IRR of 37%
Acquisition
€m
As at
31 March 2022
€m
Total
improvement
€m
Total acquisition cost/
valuation 44.5 58.8 14.3
Invested equity 18.6 — —
Annualised rent roll 4.1 4.8 0.7
Annualised net
operating income 3.5 3.8 0.3
Occupancy 94% 92% (2%)
EPRA net yield
(1)
7.8% 6.3% (1.5%)
Total return to
31 March 2022
€m
Retained profit
(2)
8.2
Valuation increase 14.3
Capex (2.7)
Cumulative total return 19.8
(1) Includes purchaser acquisition costs.
(2) Retained profit calculated as net operating income less bank interest.
Actual returns
Geared annualised IRR 37%
Ungeared annualised IRR 18%
Strategic report Governance Financial statements
25
Sirius Real Estate Limited Annual Report and Accounts 2022
Traditional business park
Buxtehude – acquired May 2019
Strategy in action
» Excellently located fully vacant site in a well-established
industrial area near Hamburg
» Former bottling plant providing a value-add opportunity
through 28,532 sqm of vacant space requiring upgrade and a
targeted sales and marketing plan
» Fully equity financed with an expected capex investment of
€3.4 million to transform the asset and bring it to maturity
» As at 31 March 2022, occupancy had increased to 86%
withannualised rent roll of €1.2 million
» Total return of €9.6 million equating to an ungeared IRR
of15%
Acquisition
€m
As at
31 March 2022
€m
Total
improvement
€m
Total acquisition
cost/valuation 8.7 14.2 5.5
Invested equity 8.7 — —
Annualised rent roll — 1.2 1.2
Annualised net
operating income (0.5) 0.5 1.00
Occupancy — 86% 86%
EPRA net yield
(1)
(5.5%) 6.2% 11.7%
Total return to
31 March 2022
€m
Retained profit
(2)
2.7
Valuation increase 5.5
Capex (2.9)
Cumulative total return 5.3
(1) Includes purchaser acquisition costs.
(2) Retained profit calculated as net operating income less bank interest.
Actual returns
Ungeared annualised IRR 15%
26
Sirius Real Estate Limited Annual Report and Accounts 2022
KEY PERFORMANCE INDICATORS
Organic and acquisitive growth
driving progress
KPI KPI measure Commentary FY22/23 ambition Link to strategy
Adjusted profit
before tax (€m)
Reported profit before tax
adjusted for property revaluation,
gains and losses relating to
disposal of properties, gains and
losses relating to loss of control
of subsidiaries, changes in fair
value of derivative financial
instruments and other adjusting
items including goodwill write
off,expenses relating to share
incentive plans and other costs
considered to be non-recurring
innature such as restructuring
costs and expected selling costs
relating to assets held for sale.
€77.1m
27.9%
2022 77.1
2021 60.3
2020 54.9
2019 46.2
2018 36.7
Adjusted profit before
taxfor the year ended
31March 2022 was
€77.1million, representing
an increase of 27.9% on the
same period the previous
year. The strong increase
inearnings resulted from
acombination of organic
and acquisitive growth
inGermany and the
acquisition of BizSpace
inNovember 2021.
To increase adjusted
profit before tax as a
result of continued
organic growth and
thecontribution to
earnings of recently
acquired assets.
1
4
2
5
3
EPRA earnings per
share (c)
EPRA earnings per share 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.
6.44c
14.4%
2022 6.44
2021 5.63
2020 5.44
2019 4.47
2018 3.04
EPRA earnings per
sharefor the year ended
31March 2022 was 6.44c,
representing an increase
of14.4% on the previous
year.The development in
EPRAearnings per share is
resulted from a combination
of organic and acquisitive
growth in Germany and the
acquisition of BizSpace in
November 2021.
To increase EPRA
earnings per share as
aresult of continued
organic growth and
thecontribution to
earnings of recently
acquired assets.
1
4
2
5
3
Dividend per share (c)
Total dividend for the reporting
period which is calculated as a
percentage of funds from
operations (“FFO”). The Company
has chosen to pay out 65% of
FFO in relation to the dividend
forthe financial year ended
31March 2022. The Directors
maintain discretion to pay out
more than 65% of FFO in order to
compensate for the timing effect
of, for instance, asset recycling
activity or equity raises in order
tocontinue to pay a progressive
dividend where appropriate.
4.41c
16.1%
2022 4.41
2021 3.80
2020 3.57
2019 3.36
2018 3.16
The Board has authorised
adividend in respect of the
second half of the financial
year ended 31 March 2022
of 2.37c per share,
representing 65% of FFO,
an increase of 19.7% on the
equivalent dividend last year,
which also represented 65%
of FFO. The total dividend
for the year is 4.41c, an
increase of 16.1% on the
3.80c total dividend for the
year ended 31 March 2021.
To grow the dividend
primarily through the
accretive impact on
earnings of continued
organic growth and
impact of acquisitions.
The Company remains
committed to its policy
of paying shareholders
at least 65% of FFO
semi-annually.
1
4
2
5
3
Strategic report Governance Financial statements
27
Sirius Real Estate Limited Annual Report and Accounts 2022
KPI KPI measure Commentary FY22/23 ambition Link to strategy
Property valuation –
owned properties (€m)
The book value of owned
investment property in both
Germany and the United
Kingdom for the year ended
March 2022 including that
categorised as held for sale as
derived from an independent
valuation performed by
Cushman& Wakefield LLP.
€2,074.9m
54.0%
2022 2,074.9
2021 1,347.2
2020 1,186.2
2019 1,132.5
2018 931.2
The book value of the
Group’s owned investment
property increased by
54.0%, primarily driven
bystrong income driven
like-for-like increases in
valuation, asset purchases
and the acquisition
ofBizSpace.
To continue to grow
thevalue of the Group’s
portfolio through
acquisitions and
valuation gains derived
predominantly through
increases in income.
TheCompany’s capex
investment programmes
and investment into
vacant space are expected
to continue to impact
valuation positively.
1 2 3
EPRA NTA per share (c)
EPRA NTA per share is a
definition of net tangible assets
as set out by the European Public
Real Estate Association. EPRA
NTA represents net assets after
adjusting for derivative financial
instruments and deferred tax
relating to valuation movements,
goodwill and intangible assets.
EPRA NTA per share also takes
into account the effect of the
granting of shares relating to
long-term incentive plans.
107.28c
16.2%
2022 107.28
2021 92.29
2020 80.44
2019 74.52
2018 68.95
EPRA NTA per share
increased in the period
by16.2% to 107.28c
(31March 2021: 92.29c).
The increase is attributable to
the valuation increases seen
in the year and increased
profits driven byorganic
and acquisitivegrowth.
To grow EPRA net
tangible assets
(“EPRANTA”) per share,
through the continued
execution of the Group’s
asset management
initiatives relating to
organic growth and
asset recycling.
1 3
Strategic priorities
Active portfolio management
Transformation and conversion of vacant space
Occupancy and rental growth
Improvement in service charge recovery
Growth through acquisition and recycling
Read more about our strategy
see pages 22 and 23
1
2
3
4
5
ASSET MANAGEMENT REVIEW  GERMANY
Active asset management
Introduction
Sirius owns and manages business parks and industrial estates
in and around the top seven cities in Germany, as well as some
sites located in border towns to France and the Netherlands.
Sirius operates a value add business model where it utilises the
asset management expertise of its internal operating platform
and aims to increase occupancy, net operating income and
capital values in the properties it owns. The Company currently
owns a total of 69 mixed-use industrial, warehouse and office
properties in Germany whilst managing an additional nine
(seven of which it holds a 35% interest through the Titanium
venture with AXA IM Alts).
In Germany the Company provides 1.8 million sqm of lettable
production, storage and office space, most of which is offered
on a conventional basis with approximately 6% of space
converted into Sirius’ unique and highly effective Smartspace
products which are offered on a more flexible basis with a range
of services. Smartspace products include serviced offices,
self-storage and workboxes and are usually created from excess
office space, basements and redundant halls which most
conventional property owners would often leave as structural
vacancy as they do not have the capacity or know-how to deal
with such space. Key to providing such a wide range of options
to its tenants is the Company’s internal operating platform and
sophisticated online marketing and IT infrastructure which it has
developed over the last 15 years.
Sirius has over 6,000 tenants in Germany; 38% of the
annualised rent roll is attributable to the top 50 tenants which
are generally large multinational businesses and 55% to around
3,000 SME tenants which form the backbone of the German
economy. The remaining 7% of its annualised rent roll comes
from the 3,000 micro-SMEs and individual tenants which rent
space through the Company’s Smartspace range of products
where they benefit from cost certainty and maximum flexibility.
The Company’s ability to provide a mix of conventional and
flexible space significantly enhances the returns and
sustainability of income that can be generated from German
light industrial and out of town office assets. This has been
proven by the Company’s track record of being able to deliver
significant organic increases in net operating income in
Germany over the last 15 years in all market conditions.
Lettings and rental growth
The Company recorded a like-for-like increase in its German
annualised rent roll of 6.4% to €102.7 million (31 March 2021:
€96.5 million*) whilst the German total annualised rent roll
increased in the year end by €17.2 million to €113.7 million
with€6.2 million relating to organic growth and €11.0 million
representing the impact from acquisitions.
Encouragingly, like-for-like average rate per sqm increased by 5.3%
to €6.50 (2021: €6.17*) demonstrating the reversionary potential
within the portfolio that the Company is confident of realising
through its range of intensive asset management activities.
Like for like occupancy increased to 87.4% (March 2021: 86.6%*)
whilst, importantly, the acquisitions made during the year
resulted in total occupancy reducing to 84.2% (March 21;
86.6%*) providing significant opportunity to add value and grow
income which is expected to help Sirius continue its strong
organic growth record into the future.
The increase in annualised rent roll in the period can be broken
down into move-outs of 127,091 sqm that were generating
€10.2 million of annualised rent roll at an average rate of
€6.67per sqm being offset by move-ins of 140,087 sqm
generating €13.5 million of annualised rent roll at an average
rate of €8.02 per sqm. Additionally, contracted rental rate
increases and uplifts on renewals added a further €2.9 million
tothe annualised rent roll at the period end. As mentioned
above, the acquisitions that completed in the financial year
added €11.0 million to the annualised rent roll.
The movement in annualised rent roll is illustrated in the
tablebelow:
€m
Annualised rent roll 31 March 2021 96.5 *
Move-outs (10.2)
Move-ins 13.5
Contracted uplifts 2.9
Acquisitions 11.0
Annualised rent roll 31 March 2022 113.7
* Annualised rent roll of €96.5 million when excluding the expected
move-out in the first half of the March 2022 financial year relating
tothe Fellbach II acquisition which completed in March 2021.
28
Sirius Real Estate Limited Annual Report and Accounts 2022
€113.7m
total annualised rent roll
€6.31 per sqm
average rate
€201.9m
of new on balance sheet acquisitions completed
ornotarised in the period
Underpinning the strong increase in rent roll in the year was an
8.6% increase in the number of enquiries generated compared
to the previous year, while a conversion rate of 13% remained
steady year on year. A month-by-month comparison of enquiries
relating to the wholly owned portfolio in Germany is set out in
the table below:
Enquiries comparison FY22 to FY21
No. of enquiries
FY22
No. of enquiries
FY21
Change
%
April 1,235 1,031 19.8%
May 1,333 1,044 27.7%
June 1,341 1,176 14.0%
July 1,305 1,198 8.9%
August 1,435 1,241 15.6%
September 1,387 1,353 2.5%
October 1,351 1,354 (0.2)%
November 1,421 1,341 6.0%
December 1,183 1,049 12.8%
January 1,495 1,376 8.6%
February 1,324 1,268 4.4%
March 1,370 1,467 (6.6)%
Total 16,180 14,898 8.6%
Against the backdrop of the pandemic, disruption to supply
chains and changes in tenant demands the Company continued
to adopt a highly progressive and flexible approach to its
marketing activities with several initiatives launched based on
data generated from detailed analysis of online search patterns.
Flexibility and competitive pricing continued to be key factors in
decision making whilst demand for storage and flexible office
space also increased compared to the prior year.
As a result of having direct line of sight into the marketplace
theCompany was able to focus its marketing strategies on
spaces and products that meet fast changing demand
dynamics. Accordingly, the Company generated an increased
number of enquiries compared with the prior year which
resulted in an increase in the volume of sales by sqm.
Details of the month-by-month lettings performance and square metre volumes compared to the same period in the previous year
are set out in the table below:
Lettings comparison FY22 to FY21
New deals
twelve months
to March 2022
New deals
twelve months
to March 2021
Total sqm
let twelve months
to March 2022
Total sqm
let twelve months
to March 2021
Average sqm per
deal twelve months
to March 2022
Average sqm per
deal twelve months
to March 2021
April 219 115 13,463 8,025 61 70
May 170 130 15,953 11,282 94 87
June 166 165 12,629 11,242 76 68
July 139 215 15,185 13,170 109 61
August 182 259 11,877 15,324 65 59
September 175 226 14,650 15,052 84 67
October 193 220 14,336 12,371 74 56
November 163 192 10,357 14,193 64 74
December 171 168 12,042 12,327 70 73
January 138 215 15,065 13,248 109 62
February 198 197 13,769 14,502 70 74
March 157 143 12,778 20,329 81 142
Total 2,071 2,245 162,102 161,065 78 72
Tenant retention in the period was encouraging with a 75% renewal rate by square metres in the period being successfully extended
(2021: 72%). Overall, the continued positive performance in marketing, lettings and renewals provides a clear demonstration of the
ability of the Company to grow against the backdrop of rapidly changing market dynamics.
Strategic report Governance Financial statements
29
Sirius Real Estate Limited Annual Report and Accounts 2022
Cash collection
Having visibility and close control of cash collection continues to be an advantage of having an internal operating platform as the
impact of the pandemic remains. As a result of the combination of close collaboration between the Company’s experienced cash
collection team and on-site staff the Company was able to increase its cash collection rate to 98.4% (March 2021: 98.2%) as set out
in the table below. This was also despite the material increase in total billing to €163.0 million (net of VAT) from €143.8 million in
31March 2021.
Cash collection
Invoiced
€000
Outstanding
€000
Collection
%
April 12,551 135 98.9%
May 12,488 149 98.8%
June 12,747 144 98.9%
July 12,895 165 98.7%
August 12,932 161 98.8%
September 13,113 180 98.6%
October 13,085 164 98.7%
November 14,090 190 98.7%
December 14,833 251 98.3%
January 14,565 313 97.9%
February 14,859 327 97.8%
March 14,863 431 97.1%
Total 163,021 2,610 98.4%
Asat year end uncollected debt amounted to €2.6 million with outstanding rent of €2.0 million and service charge prepayments
of€0.6 million. From a tenant base of approximately 6,000 tenants the Group issued ten deferred payment plans amounting to
€0.6million whilst total write-offs amounted to €45,000. The Company expects to collect most of the outstanding debt
fortheperiod over the next twelve months through its regular debt collection activities.
Acquisitions and disposals
As investment markets in Germany grew in confidence following the easing of the pandemic, the Company was able to increase
itsinvestment activity, finishing the year with a total of €201.9 million invested or committed in ten acquisitions. These fully owned
assets are expected to contribute a total of €8.8 million of net operating income at 62% occupancy, representing an EPRA net initial
yield of 4.4%. The acquisitions provide the opportunity to grow income through increasing occupancy, with more than 118,000 sqm
of vacant space and significant scope for selective investment in unused or underutilised space.
A summary of the acquisitions that completed or were notarised in the year are detailed in the table below:
Total
investment
(incl. acquisition
costs)
€000
Total
acquisition
sqm
Acquisition
occupancy
%
Acquisition
vacant
sqm
Annualised
acquisition
rent roll *
€000
Acquisition
non-recoverable
service charge
costs
€000
Acquisition
maintenance
costs
€000
Annualised
acquisition
NOI *
€
EPRA net
initial
yield *
(1)
%
Sirius
Essen I 10,706 14,711 80 2,897 829 (125) (13) 691 6.5
Öhringen 9,023 18,010 — 18,010 — (609) (32) (641) (7.1)
Heiligenhaus 14,237 45,081 77 10,269 1,396 (233) (41) 1,123 7.9
Frankfurt III 21,245 10,187 54 4,696 849 (209) (43) 598 2.8
Essen II 12,151 11,709 81 2,248 954 (92) (11) 851 7.0
Erfurt 11,679 22,333 81 4,143 766 (123) (20) 623 5.3
Oberhausen 39,843 77,605 63 28,680 3,218 (795) (90) 2,334 5.9
Neckartenzlingen 34,485 54,514 80 10,705 2,196 (237) (22) 1,937 5.6
Rastatt 8,783 21,426 — 21,426 3 (220) (19) (236)
(2.7)
Subtotal 162,152 275,576 63 103,074 10,211 (2,643) (291) 7,280 4.5
Notarised
Düsseldorf III** 39,789 34,310 55 15,517 2,105 (521) (31) 1,552
3.9
Total 201,941 309,886 62 118,591 12,316 (3,164) (322) 8,832 4.4
(1) Includes purchaser costs.
* See the Glossary section of the Annual Report and Accounts 2022.
** Expected to complete July 2022.
30
Sirius Real Estate Limited Annual Report and Accounts 2022
ASSET MANAGEMENT REVIEW  GERMANY CONTINUED
A summary of the opportunities and characteristics of each
asset acquired in the period is detailed below.
» The Essen I asset completed in May 2021 and was acquired for
total acquisition costs of €10.7 million. The asset provides a
mix of production, storage and office space located in the heart
of Germany’s industrial Rhein-Ruhr region. The acquisition
represents the Company’s first of two investments in Essen
during the period, providing for meaningful operational
synergies in a location the Company knows well through its
long-standing management of an asset located in the city.
» The Öhringen asset was completed in August 2021 for total
acquisition costs of €9.0 million. Located in the town of
Öhringen in Baden-Württemberg, the asset provides over
18,000 sqm of lettable space including 15,800 sqm of
desirable warehouse space. The site includes a land parcel
that may be considered for future light industrial
development amounting to 11,600 sqm. The asset, having
been acquired wholly vacant,, has already benefited from
integration into the Sirius operating platform with occupancy
rapidly increasing to approximately 92% and generating
€1.0million of annualised rent roll as at 31 March 2022.
» The Oberhausen business park, completed in November 2021
for €39.8 million, is located in a well-developed commercial
area of the city of Oberhausen, in the northwest of Germany’s
Rhein-Ruhr region. Providing day one net operating income
of €2.3 million, the asset offers a wide range of uses with
approximately 77,600 sqm of lettable space, of which 47,400
sqm is office space, 19,200 sqm warehouse space, 4,600
sqm storage and 6,400 sqm other space.
» The multi-tenanted business park at Heiligenhaus,
Nordrhein-Westfalen, was acquired for total acquisition costs
of €14.2 million. The asset provides approximately 45,000
sqm of lettable space consisting of 23,200 sqm of office
space, 11,400 sqm of warehouse space, 7,800 sqm of
production space and 2,600 sqm of other space. The town of
Heiligenhaus is located between the cities of Essen, Duisburg,
Düsseldorf and Wuppertal and benefits from good autobahn
and public transport links. The property was acquired with
annualised net operating income of €1.1 million per annum
at77% occupancy and, with an undemanding average rent
of€2.44 per sqm (excluding parking and other income), it
provides opportunity through vacancy and to capture
reversionary income growth.
» The Company completed the acquisition of a multi-tenanted
office tower in Frankfurt comprising total lettable area of
approximately 10,000 sqm for total acquisition costs of
€21.2million. At acquisition, the property generated
annualised net operating income of €598,000 at 54%
occupancy equating to an average rent of €11.02 per sqm
(excluding parking and other income). The property benefits
from its location close to two main autobahn routes and aligns
to the Company’s strategy of providing a range of flexible out
of town office products that appeal to the local market.
» Following on from the completion of the Company’s first
investment in Essen in May 2021 the Company added to its
footprint through the completion of the Essen II property for
total acquisition costs of €12.2 million in November 2021.
The Essen II asset comprises 11,709 sqm of office and
production space and, at 81% occupancy, generated
annualised net operating income of €851,000 representing
an attractive day one net initial yield of 7.0%.
» The completion of the multi-tenanted business park asset in
Erfurt, lying halfway between Frankfurt and Berlin, represents
the Company’s first investment into this key logistics location.
With total acquisition costs of €11.7 million the asset consists
of 14,000 sqm of industrial space, 7,400 sqm of office space
and 760 sqm of other space. At date of acquisition, the site
generated €623,000 of annualised net operating income at
81% occupancy providing opportunity to grow income through
the letting of vacant space as well as the potential to invest into
the 18,000 sqm land parcel acquired as part of the transaction.
» The Company completed the acquisition of the Neckartenzlingen
property, located to the south of Stuttgart, for total acquisition
costs of €34.5 million in December 2021. The high-quality
asset comprises 54,515 sqm of predominantly production
and warehouse space with annualised net operating income
of €1.9million and a WALE of 8.1 years providing stable,
long-term cash flows. Income growth opportunity is expected
to come from the letting of vacant space which amounted to
10,700 sqm (19.6% of total space) at date of acquisition.
» The fully vacant Rastatt asset completed in March 2022 for total
acquisition costs amounting to €8.8 million. Located in a key
logistical city on the French-German border, this property
provides 6,000 sqm of office space and 15,000 sqm of
industrial space. With over 21,000 sqm of high-quality
vacantspace the Company is confident of quickly growing
occupancy and rental income.
» Within the period the Company notarised the acquisition of the
Düsseldorf III asset which is expected to complete inJuly 2022
for total acquisition costs of €39.8 million. Themulti-tenanted
site is located in close proximity to the Düsseldorf international
airport and provides 24,400 sqm of office and 9,900 sqm of
industrial space. With over 15,500 sqm of vacant space at the
date of notarisation, the site provides significant rental growth
opportunity. In addition, as the Company’s third investment in
the Düsseldorf market, Sirius expects to benefit from
meaningful operational synergies.
The marketing and sales capabilities within the operating
platform are part of several asset management disciplines that
provide the Company with a significant competitive advantage
over other owners of light industrial and business park assets
inGermany. This allows Sirius to be more flexible with how it
configures and offers its vacant space which should result in
theCompany being able to more easily to fill up and transform
these newly acquired sites and hence make the high returns
atthe asset level which underpins the Company’s significant
organic growth it generates each year.
Capex investment programmes
The Group’s capex investment programmes have historically
and continue to be focused on the transformation of sub-optimal
vacant space acquired through the Company’s acquisition
programme, but now also includes undervalued and lower
quality space which it receives back from vacating tenants.
Thisacquired vacant space is usually purchased for very little
orno cost due toit being considered as structurally void by
former owners, whilst the low quality vacated space has
significant potential to increase income and value through
investment before re-letting.
The capex investment programme commenced in 2014 on
sub-optimal vacant space identified within the existing portfolio
and has been expanded significantly through all of the acquisitions
which have taken place since then. To date, approximately
381,000 sqm of space has been transformed with a total
investment of €58.5 million generating €24.3 million of
annualised rent roll at 78% occupancy. As occupancy increases
to budgeted levels, an additional €0.9 million of annualised rent
roll is expected to be generated from this transformed space.
The success of the investments made has been attributable in
part to the unique marketing and sales initiatives that Sirius deploys.
Strategic report Governance Financial statements
31
Sirius Real Estate Limited Annual Report and Accounts 2022
Capex investment programmes continued
Not only has a significant amount of incremental annualised rent roll been generated but also the transformation and let up of this
suboptimal space has made a strong contribution to the improvement in service charge cost recovery and valuation gains the
Company has recorded in recent years. In addition, the transformative nature of the Company’s capex investment programmes
increases the overall desirability and quality of the portfolio.
More detail on the Company’s capex investment programme to date is provided in the following table:
Combined capex
programmes Sqm
Investment
budgeted
€m
Actual
spend
€m
Annualised
rent roll *
increase
budgeted
€m
Annualised
rent roll *
increase
achieved to
March 2022
€m
Occupancy
budgeted
%
Occupancy
achieved to
March 2022
%
Rate
per sqm
budgeted
€
Rate
per sqm
achieved to
March 2022
€
Completed 380,876 64.0 58.5 23.2 24.3 81% 78% 6.27 6.85
In progress 1,652 1.2 0.6 0.1 — 80% — 6.99 —
To commence in
nextfinancial year 62,497 15.8 — 4.4 — 81% — 7.26 —
Total 445,025 81.0 59.1 27.7 24.3 81% — 6.41 —
* See the Glossary section of the Annual Report and Accounts 2022.
In addition to the space that has been completed and let or is currently being marketed, a total of approximately 64,000 sqm of
space is either in progress of transformation or awaiting approval to commence transformation. A further €16.4 million is expected
to be invested into this space, on top of the €0.6 million already spent, and, based on achieving budgeted occupancy, incremental
annualised rent roll in the region of €4.5 million is expected to be generated from it.
As set out within the acquisitions analysis within this report, approximately 118,000 sqm of vacant space was acquired relating
toassets that completed or were notarised in the year under review. A total of 76,361 sqm of space was identified as suitable for
investment within these assets and have subsequently been added to the capex investment programme. The capex investment
programmes have been one of the key income and valuation growth drivers over the last few years and the Company will continue
to seek to acquire assets with sub-optimal vacancy in order to refuel these highly accretive programmes.
In addition to the capex investment programmes on the acquired sub-optimal vacancy, Sirius also looks for opportunities to upgrade
recentlyvacated space that is returned as a result of move-outs. Within the existing vacancy as at 31 March 2022, the Company has
identified approximately 27,300 sqm of recently vacated space that has potential to be upgraded. This space was generating €1.0million
inannualised rent roll from the existing tenants and can be upgraded with an investment of €6.4 million to generate €2.4million in
annualised rent roll when re-let. This selective investment in vacated space allows the Company to capture reversionary potential
whilst significantly enhancing the desirability and value of lower quality space.
The analysis below details the sub-optimal space and vacancy at 31 March 2022 and highlights the opportunity from developing this space.
Vacancy analysis – March 2022
Total space (sqm) 1,785,276
Occupied space (sqm) 1,503,097
Vacant space (sqm) 282,179
Occupancy 84%
% of total
space Sqm
Capex
investment
€m
ERV *
(post investment)
Structural vacancy 2% 39,879 — —
New acquisitions capex investment programme 4% 64,145 (16.4) 4.5
Recently vacated space 2% 27,300 (6.4) 2.4
Total space subject to investment 5% 91,445 (22.8) 6.9
Lettable vacancy:
Smartspace vacancy 1% 26,455 — 2.8
Other vacancy 7% 124,400 (0.7) 7.1
Total lettable space 8% 150,855 (0.7) 9.9
Total vacancy 16% 282,179 (23.5) 16.8
* See the Glossary section of the Annual Report and Accounts 2022.
As a result of adding the vacant space within the acquired assets in the period, the Company’s headline occupancy rate reduced to
84.2% (March 2021: 86.6%). When excluding the structural vacancy, the Company has over 240,000 sqm of space to let with an ERV
of approximately €16.8 million.
Whilst the capex investment programmes are a key part of Sirius’ strategy, they represent one of several ways in which the Company
can organically grow income and capital values. A wide range of asset management capabilities including the capturing of contractual
rent increases, uplifts on renewals and the re-letting of space at higher rates are expected to continue to make a strong contribution
to the Company’s annualised rent roll. Should a high inflationary environment persist the contribution to annualised rent roll from
rent increases is expected to increase.
32
Sirius Real Estate Limited Annual Report and Accounts 2022
ASSET MANAGEMENT REVIEW  GERMANY CONTINUED
Whilst adding vacancy through acquisitions enhances the organic growth opportunity into the future, the Company maintains a
riskadjusted strategy and expects to continue to hold a significant amount of core mature assets in order to maintain a balanced
portfolio that provides a combination of stable, long-term financeable income with value-add assets with growth potential.
Well-diversified income and tenant base
Against the backdrop of continued market disruption, the importance of a well-diversified tenant base and wide range of products is
clear. Sirius’ portfolio includes production, storage and out of town office space that caters to multiple usages and a range of sizes
and types of tenants. The Company’s business model is underpinned by its tenant mix which provides stability through its large
long-term anchor tenants and opportunity through the SME and flexible individual tenants.
The Group’s large anchor tenants are typically multinational corporations occupying production, storage and related office space
whereas the SMEs and individual tenants occupy space on both a conventional and a flexible basis including space marketed under
the Company’s popular Smartspace brand which provides tenants with a fixed cost and maximum flexibility. The Company’s largest
single tenant contributes 2.2% of total annualised rent roll whilst 7.1% of its annualised rent roll comes from government tenants.
SMEs in Germany, the Mittelstand, are typically defined as companies with revenues of up to €50.0 million and up to 500 employees.
SME tenants remain a key target group which the Company’s internal operating platform has demonstrated an ability to attract in
significant volumes as evidenced through thehigh number of enquiries that are generated each month, mainly through the
Company’s own marketing channels. Thewide range of tenants that the Sirius marketing and sales team is able to attract is a key
competitive advantage for the Company and results in a significantly de-risked business model when compared to other owners of
multi-tenanted light industrial and business park assets.
The table below illustrates the diverse nature of tenant mix within the Sirius portfolio at the end of the reporting period:
No. of
tenants as at
31 March 2022
Occupied
sqm
% of
occupied sqm
Annualised
rent roll *
€m
% of total
annualised
rent roll *
%
Rate
per sqm
€
Top 50 anchor tenants
(1)
50 671,748 45% 43.7 38% 5.41
Smartspace SME tenants
(2)
3,016 69,935 5% 7.7 7% 9.23
Other SME tenants
(3)
3,010 761,414 50% 62.3 55% 6.82
Total 6,076 1,503,097 100% 113.7 100% 6.31
(1) Mainly large national/international private and public tenants.
(2) Mainly small and medium-sized private and public tenants.
(3) Mainly small and medium-sized private and individual tenants.
* See the Glossary section of the Annual Report and Accounts 2022.
Smartspace and First Choice
Sirius’ Smartspace products are designed with flexibility in mind, allowing tenants to benefit from a fixed cost which has proven to be
desirable in all market conditions. The majority of Smartspace has been developed from space that is either sub-optimal or considered
to be structurally void by most light industrial real estate operators. Following conversion, the area is transformed into space that can
be let at significantly higher rents than the rest of the business park and, as a result, is highly accretive to both income and value.
5,267 sqm of Smartspace was created in the year including 3,592 sqm of Smartspace storage product developed as a direct result
of the increased demand for storage space identified by the Company’s sales and marketing teams in the last few years. The Company
was also able to capitalise on high storage demand by providing additional container space storage on non-income producing land.
At 31 March 2022, these containers were generating €305,000 (31 March 2021: €168,000) in annualised rent roll.
The total amount of Smartspace in the portfolio at the year end was 96,390 sqm (31 March 2021: 93,705 sqm), generating €7.7million
(31March 2021: €6.5 million) of annualised rent roll which equates to 6.8% of the Company’s total annualised rent roll. Most encouragingly,
average rate per sqm increased by 10.6% year on year, highlighting the premium pricing opportunity associated with flexibility.
The table below illustrates how Smartspace products contribute to the portfolio as a whole:
Smartspace product type Total sqm Occupied sqm
Occupancy
%
Annualised
rent roll *
(excl. service
charge)
€
% of total
Smartspace
annualised
rent roll *
%
Rate *
per sqm
(excl. service
charge)
€
First Choice office 5,117 3,156 62% 838,000 11% 22.13
SMSP office 32,031 23,890 75% 2,744,000 35% 9.57
SMSP workbox 5,974 5,829 98% 435,000 6% 6.22
SMSP storage 47,817 34,870 73% 3,216,000 42% 7.69
SMSP container — — — 305,000 4% n/a
SMSP subtotal 90,939 67,745 74% 7,538,000 97% 9.27
SMSP FlexiLager 5,451 2,190 40% 209,000 3% 7.95
SMSP total 96,390 69,935 73% 7,747,000 100% 9.23
* See the Glossary section of the Annual Report and Accounts 2022.
Strategic report Governance Financial statements
33
Sirius Real Estate Limited Annual Report and Accounts 2022
Introduction
BizSpace currently owns and operates a total of 72 industrial
and out of town office properties across the UK. Through its
internal operating platform it aims to increase occupancy, net
operating income and capital values. BizSpace provides over
4.2 million sq ft of lettable light industrial, studio, storage and
office space, on both conventional and flexible terms.
BizSpace has approximately 3,400 customers; 26% of the
annualised rent roll is attributable to the Company’s top 100
tenants which are generally larger corporate customers and
74% is attributable to SME and micro-SME customers.
Lettings and rental growth
Since the Group completed the acquisition of BizSpace on
15November 2021, annualised rent roll has increased by 7.6%
to £45.1 million* (15 November 2021: £41.9 million*). The increase
in annualised rent roll was delivered through a combination of
increases in occupancy and strong growth in average rate.
Occupancy increased to 90.5%* from 88.7%* within the
4.5month period of ownership, highlighting the attraction of
BizSpace’s range of spaces and products to a variety of tenants.
Encouragingly, the 4.5 month period of ownership saw a 6.5%
increase in average rate from £10.98* per sq ft to £11.69* per
sq ft, highlighting the Company’s ability, through its internal
operating platform, to capture reversion in a market
characterised by undersupply.
The positive net take-up of space in the period can be broken
down into move-ins of 323,528 sq ft generating £5.8 million of
annualised rent roll at an average rate of £18.04 per sq ft being
offset by move-outs of 282,037 sq ft that were generating
£4.4million of annualised rent roll at an average rate of £15.64
per sq ft. Additionally, rental uplifts on existing tenants added a
further £1.8 million to the annualised rent roll at the period end.
The movement in annualised rent roll is illustrated in the
tablebelow:
£m
Annualised rent roll 15 November 2021 41.9 *
Move-ins 5.8
Move-outs (4.4)
Uplifts on existing tenants 1.8
Annualised rent roll 31 March 2022 45.1 *
* Excluding the Ipswich asset, which is unoccupied.
With tenants needs continuing to change rapidly and flexibility
becoming more of a necessity BizSpace is well placed to
continue its strong lettings and rental growth into the new
financial year.
Cash collection
A combination of its dedicated cash collection team and the
strong tenant relationships maintained by its on-site staff
resulted in the BizSpace recording a 99.6% cash collection rate
for the period under review. A month-by-month summary
detailing cash collection is set out in the table below.
Cash collection
Invoiced
£000
Outstanding
£000
Collection
%
November 3,281 — 100.0%
December 4,413 5 99.9%
January 3,822 5 99.9%
February 3,608 33 99.1%
March 4,405 29 99.3%
Total 19,529 72 99.6%
From total net of VAT billing amounting to £19.5 million,
uncollected debt for the period amounted to £72,000,
representing a cash collection rate of 99.6%. From a tenant base
of approximately 3,400 tenants the Company has one deferred
payment plan in place whilst total write-offs amounted to
£21,000. The Company expects to collect the majority of the
outstanding debt for the period over the next twelve months
through its regular debt collection activities.
Site investment
BizSpace has historically invested in its sites in order to maintain
and upgrade its spaces and allow it to adapt to changes in
tenant demand and drive occupancy and price. In the period
under review the BizSpace invested a total of £1.6 million into
itssites focussed primarily on improving the condition of spaces
and expects to identify further similar investment opportunities
in the new financial year whilst at the same time it will continue
to progress its ESG related investment in order to align itself
with the wider Group.
Ongoing integration
andidentification of
newopportunities
34
Sirius Real Estate Limited Annual Report and Accounts 2022
ASSET MANAGEMENT REVIEW  UK
£45.1m
total annualised rent roll
£11.69 per sq ft
average rate
99.6%
cash collection rate
Well-diversified income and tenant base
BizSpace’s portfolio includes light industrial, studio and out of town office space and storage that caters to multiple usages and
arange of sizes and types of tenants. As a result, the Company’s business model is underpinned by a well-diversified tenant base.
The Company’s top 100 tenants, which are typically large corporates, account for 26% of the annualised rent roll with the next
900SME tenants accounting for 44% of annualised rent roll. The remaining 31% of annualised rent roll relates to over 2,000 SME
and micro-SME tenants which occupy 23% of the overall estate.
The table below illustrates the diverse nature of tenant mix within the BizSpace portfolio at the end of the reporting period:
No. of
tenants as at
31 March 2022 *
Occupied
sq ft *
% of
occupied sq ft *
Annualised
rent roll *
£m
% of total
annualised
rent roll *
%
Rate
per sq ft
£
Top 100 tenants 100 1.1 28% 11.5 26% 10.21
Next 900 tenants 900 1.9 49% 19.7 44% 10.61
Remaining SME tenants 2,376 0.9 23% 13.9 30% 15.92
Total 3,376 3.9 100% 45.1 100% 11.69
* Excluding the Ipswich asset, which is unoccupied.
SMEs in the UK are typically defined as companies with revenues of up to £50.0 million and up to 250 employees. The Company’s
internal operating platform and product offering have a strong track record of attracting and retaining customers in this segment of
the market which is expected to continue to grow as a result of structural trends impacting the UK market.
Strategic report Governance Financial statements
35
Sirius Real Estate Limited Annual Report and Accounts 2022
Embedding sustainability
into our future
In line with our sustainability framework, we have continued
thisyear to develop and embed our environmental, social and
governance (“ESG”) programme into our business and strategy.
We place our people, environmental performance, and ethical
practices at the centre of our decision making, while at the same
time always considering the economic sustainability of all our
actions. We believe we have made significant progress during
the year with our ESG programme, though we recognise we
have more to do as part of our ESG journey. We plan to publish
a dedicated report on our ESG strategy and actions later in the
year to provide more context to our ambitions. Following the
acquisition of BizSpace, we are also working to integrate its
platform and team into the ESG programme.
Our sustainability framework, first published in 2019, is
overseen by the Board and the Sustainability and Ethics
Committee. Economic sustainability sits at its core with the
central belief that only a financially sustainable business can
provide a long-term positive contribution to all our stakeholders
and the environment.
Sirius’ sustainability framework
This framework continues to be the foundation to our approach.
At the beginning of the financial year, the Sustainability and
Ethics Committee reviewed the results of our first ESG materiality
assessment and, on their approval, these are now being
integrated into our framework and actions. The environmental
and social drivers are being further embedded throughout the
business as part of our developing ESG programme.
The results of the materiality exercise are summarised in
thefollowing table which ranks the identified drivers of ESG in
declining order of importance to our stakeholders. We engaged
with a wide range of stakeholders including the Board, managers,
employees, shareholders, tenants and suppliers. We were
encouraged that many of the focus areas were already part
ofour sustainability programme, though the results of the
materiality exercise have enabled us to better understand the
core areas for development and improvement.
Materiality factors Ranking
Business ethics and governance
(Boardaccountability, etc.)
1
Transparency and stakeholder engagement
2
Carbon emissions reduction
3
Modernisation/refurbishment of olderproperties
4
Employee wellbeing
5
Developing and training employees
6
Water, waste and energy management
7
Longer term physical impacts of climatechange
8
Well defined purpose and culture
9
Diversity and inclusion
10
Closer collaboration with tenants on
sustainability, green leases, H&S, etc.
11
Biodiversity and green spaces
12
Managing supply chain risks
13
Local training and employment for
localcommunities
14
Community-driven collaborative projects
15
This was our first assessment of materiality, and it is our
intention to update and build on the findings through a triennial
assessment, noting that the drivers of materiality and the
relevance to our stakeholders will change over time.
All of our actions are supported by our purpose, strategy and
values, which continue to guide us and our behaviour in our
dealings with all our stakeholders.
As we continue to develop and embed our sustainability and
ESG programme, we are pleased that our work continues to
berecognised.
EthicalPeople
Environmental
Economic
36
Sirius Real Estate Limited Annual Report and Accounts 2022
SUSTAINABILITY
Environment
As highlighted within our sustainability framework, our
responsibility to the environment has been core to our strategy
for a number of years. Our work on materiality has assisted
ustostart to deliver a roadmap on how we plan to manage and
minimise our environmental impact and create a more sustainable
future, taking into account carbon emissions, water, waste and
energy management and considering the long-term impacts of
climate change.
We see our responsibility to the environment as a core part
ofour overall strategy to transform business parks into quality
assets through intensive asset management. The maintenance
and refurbishment of existing buildings help to minimise urban
sprawl and will contribute to protecting undeveloped land.
Byrecycling existing properties, we conserve resources and
minimise the use of materials and energy required to construct
new properties. We believe that our wider stakeholders will
increasingly recognise the value of maintaining older buildings
and extending their use, thereby extending the lifespan of the
embodied carbon used in their original construction. Clearly,
older buildings have the potential to be responsible for higher
annual carbon emissions and the actions we have taken this
year look at addressing this point.
Firstly, we have continued the commitment we made a number
of years ago to sourcing our electricity for our portfolio from
renewable sources. The proportion of renewable electricity
against total electricity provision table below reflects our
progress across the entire property portfolio. As we acquire
newsites, the renewable electricity proportion fluctuates, as we
transfer them from their existing energy mix onto our renewable
energy platform, once their existing energy contracts allow.
Weestimate that the business has this year increased its
renewable electricity use to 94.6% across the whole portfolio,
which reflects the near 100% provision of renewable electricity
to much of its portfolio as well as newly acquired sites.
Year 2019/20 2020/21 2021/22
Proportion of renewable electricity 85.8% 82.4% 94.6%
We have also continued our support to our tenants by continuing
to roll out both smart meters and EV charging infrastructure across
our portfolio. EV charging stations as well as waste management,
emissions reductions and renewable energy initiatives were all
key areas of priority for our tenants in our annual tenant survey
conducted in June 2021, and we have made progress across all
areas in this financial year. We remain on target to have smart
meters across all our sites in Germany by 2027.
Smart energy meters March 2021 March 2022
Total number of sites 67 77
Total number equipped 5 12
Proportion of sites equipped 7.5% 15.6%
EV charging March 2021 March 2022
Total number of sites 67 77
Total number equipped 1 38
Proportion of sites equipped 1.0% 49%
Secondly, we have undertaken a detailed assessment of
theembodied carbon used within the refurbishment and
modernisation of our portfolio. This will enable us to understand
and measure the level of embodied carbon used as we extend
the life of buildings. In the future, the levels of embodied carbon
will be built into our decision-making processes and engagement
with our supply chain. This will also form part of our pathway
tonet zero emissions which is covered in more detail later in
thisreport.
Thirdly, we centralised our collection of waste across the
portfolio. This benefits us through the calculation of our carbon
emissions through waste, which through better data will enable
us to understand how we can further reduce emissions through
coordinated waste management. We can also now ensure that
our recycling rate and waste to landfill are improved and
managed as part of our waste reduction processes.
Our actions on the use of renewable energy, the assessment of
embodied carbon and the centralisation of waste management
are reflected in our greenhouse gas emissions, and included in
our Scope 1, 2 and 3 emissions.
Carbon emissions
Our Scope 1 emissions are based on our owned or controlled
sources, which include the use of natural gas in our Berlin head
office, and the heating of offices belonging to Sirius managers
on location in our business parks.
Our Scope 2 emissions are the indirect emissions resulting from
the generation of purchased energy, namely the electricity
consumption for the Sirius manager offices on location in our
business parks.
Our Scope 3 emissions are all indirect emissions (not included
in Scope 2) that occur in our value chain, including both
upstream and downstream emissions. These include water
consumption; waste generated in operations; business travel;
embodied carbon; upstream leased assets; and downstream
leased assets.
As we reported last year, due to timing of our utility invoicing
and other data collection and in order to provide a complete
year’s analysis, our emissions calculations are based on the last
full year of available data. Given there have not been any material
changes in either the occupancy or the consumption patterns,
this data is assumed to be applicable for the 2021/22 financial
year. The data used for the basis of calculations of emissions for
the leased assets (Scope 3) and for our Scope 1 and 2 for our
offices based on our business parks is from 1 April 2020 to
31March 2021. The data attributed to Scope 1 for our Berlin
office is from 1 April 2019 to 31 March 2020. We continue to
work with our utility providers etc to bring our emissions data
inline with our financial calendar.
Strategic report Governance Financial statements
37
Sirius Real Estate Limited Annual Report and Accounts 2022
Environment continued
Carbon emissions continued
Summary – Scope emissions
Scope
categorisation Category GHG emissions MTCO
2
-e
Scope 1 Berlin head office (NG) &
Sirius offices heating
84
Scope 2 Electricity and cooling (Sirius offices) 15
Scope 3 Berlin (electricity & cooling), business travel, Berlin (water & wastewater) &SO(water &
wastewater)
Upstream (Sirius + AXA facilities), downstream (leased location), water consumption (leased
location), waste generated (leased location), renewable energy & embodied carbon
42,821
Total 42,920
GHG intensity for Scope 1 – 0.0164 (MTCO
2
-e/sqm)
GHG intensity for Scope 2 – 0.0049 (MTCO
2
-e/sqm)
Due to the nature of our business model, our Scope 3 emissions account for 99.77% of our total emissions. This has slightly
increased from 98.9% last year as our head office and company cars are leased and so are now allocated to our Scope 3 emissions.
As a result, the year-on-year comparison is summarised in the table to the right.
Scope
2020/2021
total emission
MTCO
2
-e
2021/2022
total emission
MTCO
2
-e
Scope 1 247.15 84.02
Scope 2 152.49 15.46
Scope 3 37,321.67 42,820.79
Total 37,721.31 42,920.28
Our total emissions for the year come to 42,920 MTCO
2
-e, which compares to 37,721 MTCO
2
-e for the year to March 2021. A number of
factors explain this increase and relate to the actions taken during the year to better account for and address our carbon footprint.
Our ongoing strategy to acquire renewable energy, shown in the breakdown of our leased locations emissions below, continues to
significantly reduce our potential overall emissions. For this data period from 1 April 2020 to 31 March 2021, 82.4% of the electricity
consumed by our portfolio was sourcing from renewable electricity. As we have highlighted already, this will increase to 94.6% as we
nowacquire just under 100% of our electricity from renewable sources.
Leased locations – GHG emissions breakup (tCO
2
-e)
Heating
Waste water treatment
Cooling
Waste treatment and
disposal
Water consumption
Electricity

31,405
97
1,375
54
79
2,548
A breakdown of our Scope 3 emissions provides insight into our actions to manage and reduce our carbon emissions.
Scope Category Description Total Emission UOM
Scope 3 Purchased goods – water Water consumption details considered 53.98 MT CO
2
e
Scope 3 Purchased goods – embodied carbon Embodied carbon 6,776.61 MT CO
2
e
Scope 3 Waste generated in operations Waste water & solid waste considered 177.14 MT CO
2
e
Scope 3 Business travel Car & train & air & hotel considered 258.62 MT CO
2
e
Scope 3 Upstream leased assets Berlin & Sirius facilities & Titanium venture 226.69 MT CO
2
e
Scope 3 Downstream leased assets 69 Locations considered 35,327.75 MT CO
2
e
Firstly, our total emissions for the current year include 6,777 MTCO
2
-e of embodied carbon emissions, which were not included inour
calculations last year. As we go forward, we will look to reduce our levels of embodied carbon as part of our carbon reductionprogramme.
Secondly, the centralisation of our waste management has enabled better data collection which has enabled us to monitor that 42.3% ofourwaste
was recycled and a further 54.4% was converted from waste to energy, with only the remaining 3.3% going to landfill. Thishasaccounted for a
reduction in our emissions as without the respective data, as last year we had to assume that 100% of waste went to landfill.
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Sirius Real Estate Limited Annual Report and Accounts 2022
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Thirdly, the total number of business parks included in our emissions report increased from 65 to 69 during the period which together with
aslight increase in heating use in the portfolio accounts for an increase of 4,490 MTCO
2
-e during the year.
To highlight the work we have been doing on managing on our emissions, the table below provides an analysis of our core emissions on a per
meter basis for the total portfolio estate for both years. As we continue to develop our pathway towards net-zero emissions it is clear that our
approach will concentrate on the reduction of our heating emissions intensity.
GHG comparison
GHG emissions
2020/2021
(MMTCO
2
-e/sqm)
GHG emissions
2021/2022
(MMTCO
2
-e/sqm)
Net Electricity emissions intensity 0.00223 0.00173
Heating emissions intensity 0.01921 0.02109
Water consumption emissions intensity 0.00011 0.00004
Waste water emissions intensity 0.00022 0.00007
Waste Disposal Emission Intensity 0.00634 0.00007
A breakdown of our energy consumption by kWh is summarised in the table below:
Buildings
Heating consumption
(kWh)
Electricity consumption
(kWh)
Cooling consumption
(kWh) Renewable energy (kWh)
Berlin 1,93,049.50 2,14,020.62 — —
Space office on site 2,74,464.94 81,025.89 5,370.74 —
Sirius facilities 4,26,595.66 90,477.62 — —
Titanium venture 75,954.89 7,890.99 — —
69 leased locations 17,47,45,664.68 8,10,36,239.85 76,79,027.13 —
Total 17,57,15,729.67 8,14,29,654.97 76,84,397.87 6,68,02,096.27
3. Methodology
The reporting boundary was determined by Sirius. The organisational boundary covers the entire operations in Germany where Sirius has
absolute financial & operational control. The reporting boundary also includes the Corporate Head Office and site offices of Sirius, its sister
company SFG Nova & its leased locations.
The activity data was screened in the as-is condition for any inconsistencies or irregularities. The sources and sinks to be included in the
inventory were then identified and verified as per The Greenhouse Gas Protocol – i)A Corporate Accounting and Reporting Standard; ii)
Scope 2 Guidance; iii) Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
Scope 1 – stationary combustion
Scope 1 included the Stationary combustion of Berlin offices and offices occupied in every leased location of Sirius. Heating consumption
emissions of these locations accounted in Scope 1 category. The emission factors are suppliers specific.
Scope 2 – purchased electricity
The emissions from the purchased Electricity and Cooling consumption of the offices occupied in every leased location of Sirius were
accounted in Scope 2 inventory. The emission factors are used from Defra 2021.
Scope 3 – Category 1 purchased goods & services
Emission from water consumption & construction works were accounted in this inventory. For water consumption the emission factor is from
Defra 2021 & the emission factor of the embodied carbon is supplier specific.
Scope 3 – Category 5 waste generated in operations
The Emission from waste disposal & wastewater generated were accounted in this category. The Emission factors were specific to disposal
type used from Defra 2021.
Scope 3 – Category 6 business travel
The emission from car, train, air & hotel stay were accounted in this category. Emission factors for all this travel is supplier specific.
Scope 3 – Category 8 upstream leased assets
The purchased electricity of Berlin Head Office, and electricity, heating and cooling of Sirius Facilities GmbH and Titanium venture
wereaccounted inthis category. Supplier Specific & Defra factors were used wherever applicable.
Scope 3 – Category 13 downstream leased assets
The heating, electricity and cooling for all 69 leased sites were accounted in this category.
The emission factors used:
» For electricity – Supplier specific emissions factor
» For waste, wastewater, hotel stay and heating – Defra Conversion-Factors-2021-Full-set-for-advanced users
Strategic report Governance Financial statements
39
Sirius Real Estate Limited Annual Report and Accounts 2022
Net zero emissions pathway
During the latter part of the year, we commenced our programme to deliver a carbon emissions reduction plan which will lead to our net zero
pathway. As a first step, we have looked at our carbon reduction opportunities within our Scope 1 and 2 emissions and are pleased to
announce that we will achieve net-zero emissions for our Scope 1 and 2 emissions in Germany this year. Where we can make no further
reductions to our Scope 1 and Scope 2 emissions, the remaining unavoidable emissions will be offset through carefully selected offsetting
projects. By far the largest share of our total emissions come from operating our assets and the energy used in our buildings by our tenants
– our Scope 3 emissions. For a number of years, wehave had decarbonisation actions in place including our sourcing of renewable electricity
and the smart-meter roll-out as mentioned in this report. During the current year, we will also reduce our emissions further by moving to a
new Head Office in Berlin which is DGNB certified and will be powered by renewable electricity. However, as a landlord we recognise our
responsibility is to ensure that our business parks can be operated as energy-efficiently as possible. We are currently developing a German
portfolio-wide net-zero carbon strategy for all the different building types within our portfolio and are in the early stages of creating detailed
assessment models of a representative sample of our buildings. Once these are complete and reviewed, we will then extrapolate the findings
across the Sirius Facilities portfolio. Our aim is for this to be in line with the Science Based Targets Initiative (SBTI). Based on the outcome of
this assessment, we will then be in a position to communicate our decarbonisation plans and net zero pathway in due course. A similar
assessment model for Scope 1, 2 and 3 emissions will also be undertaken for the BizSpace portfolio.
We recognise the importance of a net zero pathway for a number of our stakeholders and the transition to net zero is a key element of our
management plans. This is best represented through our implementation of the Task Force on Climate-related Financial Disclosures (“TCFD”)
which we commenced last year.
TCFD disclosure for year end to March 2022
As a business we fully support the aims and implementation of the TCFD, and we will continue to build on and improve on our
actions and disclosure as we embed climate-related risks and opportunities into our business and strategy. We believe that we have
made significant progress during the financial year ended 31 March 2022. We also recognise that we have more to do, in particular
with regard to the integration of BizSpace, acquired in November 2021, into our climate-related strategy. This report on
implementing the recommendations of TCFD relates specifically to the Group’s German operations and assets.
In the financial year ended 31 March 2022, we completed our next steps in the TCFD process by undertaking a climate scenario
analysis based on the transition risks and potential impacts of 1.5–2.0°C of climate change in line with the Paris Agreement. We have
also undertaken an initial assessment of our physical risks up to 1.2°C of climate change. In both cases we are looking to build on
these assessments during the current financial year. We believe we are compliant with all the recommendations of TCFD, though we
will always aim to continue to improve our performance and disclosure across Governance, Strategy, Risk Management and Metrics
and Targets.
We have been aware of and taken seriously our responsibilities to the environment for a number of years and we provide an
estimated 94.6% of our electricity to tenants from renewable sources. During the year we have also completed a detailed
assessment of the embodied carbon within our supply chain and how this relates to the refurbishment and modernisation ofour
assets. In addition to this, we have started on our detailed plans for carbon emissions reduction leading to a net zero strategy for our
Scope 1, 2 and 3 emissions. This detailed assessment commenced in the beginning of calendar year 2022, prior to our reporting
period ending, and we will be updating our stakeholders in due course. As a first step, we aim to be net-zero for our Scope 1 and 2
emissions in Germany in the current year.
Looking forward, during the financial year to March 2023, we aim to integrate BizSpace into our transition risks and potential impacts in
line with the Paris Agreement; undertake a further climate scenario analysis for the business for 3.0–4.0°C of climate change; and
also conduct a further physical risk assessment.
The table below outlines our progress to date against the TCFD recommendations.
TCFD disclosures
Governance
Describe the Board’s
oversight of
climate-related risks
and opportunities
The Board assumes overall responsibility and accountability for the management of climate-related risks and
opportunities. The Chief Executive Officer provides regular updates to the Board on ESG and sustainability-related
issues, through his role as Chair of the Sustainability and Ethics Committee. The Sustainability and Ethics Committee
advises the Board on the economic sustainability of the business and works with the executive management to
shape policy and strategy to improve the Group’s environmental performance. The Board is further supported by
the Audit Committee which has responsibility for the review of the risk management methodology and the
effectiveness of internal controls. The Board reviews the risk register on an annual basis. The Board also receives
and discusses reports from the ESG Working Group.
Describe
management’s role
inassessing and
managing climate-
related risks and
opportunities
The Chief Marketing and Impact Officer is responsible for the management of climate change related issues. The
Chief Marketing and Impact Officer also heads the ESG Working Group which meets monthly and is responsible for
climate-related risks being integrated across all parts of the business. The other members of the ESG Working Group
are the Chief Financial Officer, the Environmental Director, and the Asset Management Director.
The ESG Working Group identifies ESG within its Principal Risks, within which climate-related risks and opportunities
are captured. A risk management framework is in place to ensure that relevant risks are identified and mitigated in
order to significantly increase the chances of being able to achieve the Group’s objectives of creating and sustaining
shareholder value.
The ESG Working Group is also currently in the process of finalising an ESG Framework for the business, which
includes climate-related issues. The Framework will ensure that we operate responsibly in relation to the climate,
biodiversity and other ESG issues for long-term sustainable growth.
The TCFD Working Group, also headed by the Chief Marketing and Impact Officer, has responsibility to implement the
recommendations of TCFD in line with the Company’s business plan and strategy. The TCFD Working Group reports
into the ESG Working Group which in turn reports into the Sustainability and Ethics Committee, detailed above.
40
Sirius Real Estate Limited Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
TCFD disclosures
Strategy
Describe the
climate-related risks
and opportunities the
organisation has
identified over the
short, medium and
long term
As already highlighted, this TCFD report relates to the Group’s German assets and operations. We intend to
integrate BizSpace into the TCFD recommendations in the financial year ended 31 March 2023.
Sirius considers itself to be a responsible business and is increasingly including climate-related risks and
opportunities across its business activities. During the year we completed our review of an ESG Materiality
Assessment which identified in declining order carbon emissions reduction; the modernisation/refurbishment of
older buildings; water, waste, and energy management; the longer-term physical impacts of climate change; and
biodiversity as areas for ESG consideration. We are developing our ESG Strategy, incorporating an environmental
strategy, which will formalise the identification of climate-related risks and opportunities, supported by the findings
of our materiality assessment and scenario analysis outcomes. As part of this process, we will further define the
short-term, medium-term and long-term issues to better align with our Risk Management Framework. For the
purposes of this TCFD report, we define the short-term as 1–5 years, the medium-term as 5–10 years and long-term
as 10+ years. We will build on these going forward to better understand the strategic and financial impacts of the
issues identified within these time horizons.
Short-term: 1–5 years
We will take a proactive approach to minimising the risks and maximising the opportunities as the regulatory
landscape and our tenants’ expectations changes in relation to climate-related issues. Actions are already being
undertaken in recognition of the importance of improving our environmental performance, our provision of
renewable electricity, our roadmap to net-zero emissions, the role of our supply chain, our approach to biodiversity
and working to minimise the risk of reputational damage where expectations are not met.
Medium-term: 5-10 years
In the medium term we will be focused on further managing the risks and opportunities related to climate change.
We recognise the growing importance of having a clear net-zero pathway and the importance this will have to
tenants, the capital markets and reputational value. We believe that our business strategy of extending the life of
older buildings through refurbishment and modernisation together with actions we are taking on embodied carbon
and biodiversity will provide resilience and opportunity to the business.
Long-term: 10+ years
Our initial scenario planning examines the potential impact of “early policy” changes, so we recognise we have
more work to do on our long term assessment and this will be covered in the current year. As we continue to
examine the long term, we will consider climate-related issues as well as an expected greater emphasis from
regulators and tenants on the importance of a neutral to positive impact on the environment of our assets.
Thiswillhave an increasing influence on asset valuations and income.
Describe the impact
of climate-related
risks and
opportunities on the
organisation’s
businesses, strategy,
and financial planning
As we continue to develop our ESG programme, we are beginning to factor climate-related risks and opportunities
into our business, strategy, and financial planning, and as we develop our acquisition process and our approach to
transforming and managing our assets. We are fully committed to decarbonising our business across Scope 1, 2
and 3 and will look to further develop our net zero roadmap. We will be net-zero for our Scope 1 & 2 emissions in
Germany in the current year. We will add our German Scope 3 emissions and the BizSpace portfolio to our Net-Zero
pathway in due course. Our work on our net-zero pathway includes reviews of individual assets in order to assess
energy efficiency improvement opportunities and monitoring and management of consumption data across
energy, water, waste, and embodied carbon. We are also modelling a sample of our German assets to understand
the actions and investment needed to become net-zero. This model will then be rolled out across our German
portfolio. Once completed a similar exercise will be undertaken for our UK assets. We believe future energy
efficiency measures implemented will yield improvements in overall maintenance costs, resulting in direct financial
savings and increased attraction to new and current tenants.
We focus on transforming our assets into high-quality conventional and flexible workspaces. Our capital
investment and asset management plans incorporate environmental considerations, and we completed an
embodied carbon project to better understand and measure the embodied carbon related to the operation and
modernisation/refurbishment of our buildings. Going forward we will be working with our supply chain to reduce
the levels of embodied carbon.
Our acquisition framework has been updated to include environmental considerations within the pre-acquisition
due diligence.
A strategic priority for the Company for 2022/23 is to set out our ESG framework to allow us to build on our
understanding and implementation of the climate-related risks and opportunities into our business, strategy,
andfinancial planning in the short, medium and long-term.
Describe the
resilience of the
organisation’s
strategy, taking into
consideration
different climate-
related scenarios,
including a 2°C or
lower scenario
As described, we have reviewed our strategy against an “early policy” scenario aligned to 1.5-2.0 degrees of climate
change, to meet the Government emissions targets in Germany, and have identified a number of climate-related
risks and opportunities. The result of this review is being factored into both our ESG strategy and operational plans.
We will also be undertaking a further risk and opportunity scenario for 3.0-4.0 degrees of climate change that could
have a material financial impact to the Group in the current year.
We have undertaken an initial physical risk assessment to 1.2 degrees of climate change. It is our intention to
undertake further physical risk assessments in the current year for two degrees and lower scenarios as well as
greater levels of global temperature rises. This assessment will include changes to temperatures leading to
increase cooling and heating loads, changes in precipitation leading to flash flooding and physical damage to
buildings from extreme weather events.
Our current actions, our plans for carbon emissions reduction, our roadmap to net-zero, the greater level of
physical risk assessment and our biodiversity plans will be developed to support the resilience of our business
aswe look to address both the physical and transitional risks of climate change and maximise the opportunities.
Strategic report Governance Financial statements
41
Sirius Real Estate Limited Annual Report and Accounts 2022
TCFD disclosures
Risk management
Describe the
organisation’s
processes for
identifying,
assessing, managing
climate-related risks
and how these are
integrated into the
organisation’s overall
risk management
Sirius has policies and procedures in place for the timely identification, assessment and management of the
Group’s material risks and how these are integrated into the organisations overall risk management.
The Group has an established risk management approach to identify, monitor, and mitigate risks, including ESG
risks. These will be further developed as we progress with our ESG programme. Risk management is an integral
part of the Group’s business and risks are considered at every level of decision making and across all business
activities. The risk framework is updated annually and is regularly reviewed by the Audit Committee.
We have set out below an overview of the material climate-related transitional risks we have identified as part of our
scenario process. These risks are being adopted within the current Risk Management Framework and are currently
viewed on an equal risk basis. These risks will be considered further as we develop the recommendations of TCFD
and our approach to climate risk and opportunities:
TRANSITIONAL RISKS
Markets and technology
» Reduced market demand for assets without a carbon reduction plan;
» New technologies (smart meters etc) become a hygiene factor.
Reputation
» Loss in confidence in management without emissions reduction/climate plan;
» Challenge in attracting new tenants and talent.
Policy changes
» Increased input/operating costs due to introduction of carbon price;
» Threats to licence to operate due to regulatory change.
Legal and insurance
» Higher insurance rates for buildings without green certification;
» Threat of lawsuits in regard to lack of climate risk disclosure.
PHYSICAL RISKS
We also recognise the importance of physical risk assessments and will be looking to develop this further in the
current financial year and will update and disclose our findings in due course. We have undertaken an initial
physical risk analysis of our German assets. This covers river flood, pluvial flood, coastal storm surge and
windstorm for climate change up to 1.2 degrees.
In summary:
» 15% of the portfolio are subject to a 0.5% chance of river flood over a 200 year return period;
» 1% of the portfolio is subject to a 0.5% chance of rain related flooding over a 200 year return period and 1% is
subject to a 0.2% rain related flooding over a 500 year return period;
» 1% of the portfolio is subject to a 0.2% coastal storm surge over a 500 year return period;
» None of the portfolio are subject to windstorm.
Operationally and strategically, several mitigating actions to address these transitional and physical risks are being
built into the ESG programme. These include:
» Creation and development of an ESG framework and strategy including climate-related risks;
» The creation of carbon emissions reduction plan leading to net-zero strategy;
» The management of sustainability within the supply chain;
» Development of a biodiversity strategy with complete transparency on actions and targets;
» Continued monitoring of regulatory outlook;
» Roll out of smart meters and other energy efficiency technologies across the asset portfolio;
» Continued purchase of renewable electricity;
» Continued refurbishment and modernisation of assets;
» Continued development and management of the risk framework to include ESG and climate-related matters.
It is our intention to undertake further physical risk assessments in the current year for further climate warming
scenarios and to expand the physical risk coverage in the current year.
For further details of our risk management, framework and governance, please see pages 54 to 55.
TCFD disclosure for year end to March 2022 continued
42
Sirius Real Estate Limited Annual Report and Accounts 2022
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TCFD disclosures
Metrics and targets
Disclose the
metricsused by the
organisation to assess
climate-related risks
and opportunities in
line with its strategy
andriskmanagement
process
To date, we measure a wide range of consumption data relating to energy, water, waste, and embodied carbon.
Carbon emissions is one of our main areas of focus and we report on GHG emissions, which are disclosed in the
Annual Report including Scope 1, 2 and 3 emissions.
As our ESG programme develops including the implementation of TCFD, we expect to be able to identify and
disclose additional metrics and KPIs, in particular in relation to our net zero plans.
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas
(“GHG”) emissions,
andthe related risks
Detailed reporting of our energy consumption and our Scope 1, 2 and 3 carbon emissions are disclosed in our
Annual Report on pages 37 to 39. We calculate our emissions in line with the Greenhouse Gas (GHG) Protocol
andprovide the prior year performance.
Describe the
targetsused by
theorganisation to
manage climate-
related risks and
opportunities and
performance
againsttargets
As we develop our ESG programme and strategy, in particular as relates to our net-zero ambitions and climate-
related actions, we have the ambition to set a number of challenging climate-related targets. We are in the process
of building a carbon reduction plan leading to net-zero and it is our intention to announce a roadmap to net-zero for
Scope 1 and Scope 2 in Germany in the current financial year, and for Scope 3 in due course. We intend to link
metrics and targets to this process.
BizSpace
We are in the process of integrating BizSpace’s environmental
programme which remains at the early stages. As part of the
integration, we have commenced a detailed assessment of
theEPC ratings for the property portfolio. We are currently
undertaking a review of the EPC data held by BizSpace to
identify any gaps in the energy data requirements to build
anaccurate baseline on the current ratings. To date we have
completed an EPC review on 20% of the BizSpace portfolio.
Wewill then be in position to start to build a detailed model
thatwill show any potential improvements to be made to each
building. Once this process is completed, we can commence
the implementation phase of a programme of improvements
toachieve a higher rating in line with the UK Government’s
proposed plans for all commercial rental property to have an
EPC rating of “C” by 2027 and “B” by 2030.
As we have mentioned previously, we will also be including the
BizSpace portfolio in our future net zero pathway for the Group
and we are treating the EPC review as part of the decarbonisation
programme to look at emission reduction opportunities. A first
step towards this is understanding BizSpace’s GHG emissions
and how they compare to those in Germany. This analysis is
ongoing and will continue during the current year. However,
based on an initial assessment of the last four months of the
financial year, which is the best representative period following
the acquisition, we have outlined a summary of BizSpace’s GHG
emissions below.
Summary – Scope emissions
Scope
categorisation Category
GHG
emissions
MTCO
2
-e
Scope 1 Space Offices – Heating 9.10
Scope 2 Space Offices – Electricity —
Scope 3 Water Consumption (Leased
Locations), Waste disposal (Leased
Locations), Downstream leased asset
(Electricity & Heating)
1,096.57
Total 1,105.67
BizSpace utilises 100% renewable electricity from the grid and
for the basis of this calculation we have assumed a markets
based approach, so there are no emissions from purchased
electricity to be accounted in the Scope 2 category. We do
highlight that this assumption may change in the future as we
continue the integration process. BizSpace’s total GHG
emissions are calculated as 1106 MTCO
2
-e. As the table shows,
the majority of the GHG emissions are classified as Scope 3 from
the operational use of BizSpace’s properties by tenants across
the 72 sites, representing over 97% of our total emissions. In the
chart below, we have broken down the emissions at the leased
properties, which are directly attributed to the operational use
of our assets.
Leased Locations – GHG emissions breakup
(MTCO
2
-e)
Water consumption
Waste disposal
Downstream leased asset
(electricity)
Downstream leased asset
(gas consumption)

1,063
0
7.04
6.65
Methodology and emissions factors
The data used for the basis of calculations of emissions for the
leased assets is for energy consumption from 1 December 2021
to 31 March 2022.
The area occupied by BizSpace’s space offices for each site has
been assumed to be 350 sq ft in order to compute the heating
emission for Scope 1 Inventory & Electricity Emission for
Scope 2 Inventory.
Scope 3 Emission were calculated based on Water consumption,
Waste disposal, Business travel & Downstream leased assets.
We will also, in the future, integrate BizSpace’s activities into our
embodied carbon initiatives as well as our biodiversity programme.
Strategic report Governance Financial statements
43
Sirius Real Estate Limited Annual Report and Accounts 2022
Biodiversity
At Sirius we also recognise the importance of protecting
biodiversity and the natural environment and take our
responsibility through the assets we own extremely seriously.
Our actions to date have been based on improving biodiversity
through the creation of new habitats or improving existing ones.
Across Germany we have over 500,000 sqm of green space and
we are focused on protecting and enhancing these spaces. Our
work is concentrated on three areas where we believe we can
have a direct and positive impact – trees, flowers and bees.
There are currently 9,000 trees on Sirius properties, which
wecare for and protect. In addition to our work on our own
properties, we recognise the significant role trees play in the
global ecosystem as suppliers of oxygen, capturers of CO
2
,
protectors of the water supply and against soil erosion and
providers of habitat. Through a partnership with Tree Nation,
wecreated a Sirius corporate forest which supports various
reforestation projects around the world and set a target to plant
10,000 trees by the end of the financial year to March 2022.
Inrecognition of our own impact on the planet, we agreed to
plant a tree for every employee anniversary, conclusion of a new
rental agreement, completion of a tenant questionnaire in our
surveys, and participant meeting in a Sirius conference centre.
A total of 10,458 trees were planted in the year, accounting for
1,129.5 tonnes of carbon dioxide being absorbed through
reforestation projects covering the Amazon, Kenya,
Madagascar, Tanzania, Nepal and Spain.
Our work with the natural habitat also looks at expanding the
diversity of our green spaces. We have identified over 30,000 sqm
of green space that were previously lawns which are being
converted into natural wildflower meadows. To date, 21,559 sqm
have already been converted during the year, with the remainder
to be completed in 2022. This is part of our plan to create spaces
for pollinators and insects through a seed mix developed for use
in urban areas, producing meadows that are both a protective
habitat and food supply for insects and smaller animals.
Our work on our green spaces links to the third strand of our
biodiversity programme which is the protection and promotion
of bees. Working with Hektar Nektar, Sirius has sponsored ten
bee colonies that have been placed in the most suitable habitats
and are taken care of by beekeepers across Germany, with a
further ten hives added post year end in April 2022. It is estimated
that we have already enabled the bee population in these hives to
have increased to 1,000,000 bees since the project commenced
as of April 2022. This is part of our co-operation with Hektar
Nektar to increase the overall bee population in Austria and
Germany by 10% by 2028.
People
Our people are central to our success, and we work hard to
ensure that they feel valued and included in the development
ofour business and as we execute on our strategy. Despite the
continued disruption from Covid-19 that we faced throughout
the year, with the need for many people to adapt their working
patterns, we managed to build on the foundations of our strong
culture, purpose and values. This year, we have also had the
opportunity of welcoming the BizSpace team to the wider
Group and we look forward to working as one team to unlock
opportunities in the UK and Germany.
Our annual employee survey was undertaken in May 2021
andshows the results of our efforts. The survey continues to
bean important instrument for us to measure our progress
andengagement with our colleagues. We had a very strong
response rate of 86.5% and the leadership of the Company
received praise with over 77% of employees showing strong
approval, and 75% of employees also stating they feel valued by
their managers, which is a testament to our culture. Almost 80%
of our colleagues also found that positive changes have been
implemented since the last survey, which we are proud of
considering the challenges we have all faced during the
Covid-19 pandemic. We followed up the survey with a series
ofCEO Forums across Berlin and the regions to ensure our
employees were fully briefed and part of the feedback and
findings process.
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Sirius Real Estate Limited Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
Values, behaviours and competencies
Last year, we defined the values which we believe have been,
and will be, integral in shaping our success. Our values drive the
culture and behaviour that enable us to implement our strategy
and achieve our purpose. This year, one of our main priorities
has been to bring our Sirius values to life. We have translated
the values into competencies and behaviours to support our
employees in understanding and adapting them into their
day-to-day working lives. We have commenced the roll-out of
the values throughout the business with in-person and virtual
sessions, and embedding them into our existing processes
including training, recruitment and onboarding and introducing
our annual values champion recognition and award scheme.
We started the roll-out with our Board and our senior managers,
recognising that change must be led from the top. Through an
inclusive engagement programme involving our senior team
and a small group of volunteers, we are currently extending our
programme to all members of staff, which we have targeted to
be completed by June 2022. We will review our progress during
our annual employee survey which will again be undertaken
thissummer.
These values are also transferable, and we have started, with
success, to embed our purpose and values into the BizSpace
operation, with the necessary behaviours and competency work
being completed during the remainder of 2022. It is very
encouraging to note the similarities in both the purpose and
values held by the two businesses and the integration is
progressing in line with expectations.
Sirius core values
Humility » Value openness and inclusivity, and
becurious about ideas, opinions
andexperiences
» Seek, provide and encourage honest
feedback and discussion
» Be hungry to listen and learn from others
Integrity » Act responsibly, take personal
accountability for our actions and
commit to the success of the team
» Demonstrate respect towards others at
all times and maintain professionalism in
everything we do
Adaptability » Be agile, ready to tackle new challenges
when they arise and grasp new
opportunities
» Value flexibility in the way we work and
respond to customer needs
» Be open to change, encourage
innovation and be relentless about
looking for ways to adapt and improve
Industriousness » Work hard and smart, and show
determination to find solutions and
achieve results
» Pursue excellence, and define success
as doing the right thing, well
Diversity and inclusion
This year, our focus has been on continuing to evolve our
approach to diversity and inclusion (“D&I”), driven by the work
of our diversity committee and diversity ambassadors. D&I is
atthe core of our employee value proposition as we work to
promote diversity, prevent discrimination and create equal
opportunities. We do this through numerous programmes
andinitiatives throughout our Company.
We have focused on the overall employee experience at each
stage of the employment life cycle at Sirius. This was done in
partnership with a group of diverse employees who shared their
experiences and ideas for further evolving D&I. Priorities have
included a review of policies and procedures to ensure they are
D&I compliant as well as an increased focus on mentorship.
We are also linking all of our D&I work to the Sirius values and
competencies which, as we have described in this report, are
being rolled out across our business, and will also be embedded
into BizSpace in the next financial year.
Our colleagues are reflective of our commitment to diversity
and inclusion, with 37 nationalities represented across a range
of ages of 20 to 64. We also have a near 50:50 gender balance
across the business with 51% female and 49% male employees.
Looking at gender balance in leadership positions, a woman
holds every third leadership position (34%). We are pleased to
see our efforts are being recognised, with Sirius receiving a
score of 74 out of 100 by the Women’s Career Index (FKi –
Frauen Karriere Index), which benchmarks companies that
support the advancement of women and promote diversity.
This year, we maintained our support for LGBTQ+ employees
through our membership of the LGBTQ Great, a global
membership organisation that specialises in developing
diversity and inclusion within the workplace. This follows our
signing of the European Commission’s Diversity Charter for
Germany, of which we have been a signatory since 2014, which
covers all dimensions of diversity including sexual orientation
and gender identity. Other initiatives in the year include the
introduction of non-binary bathrooms in head office and across
our properties.
Strategic report Governance Financial statements
45
Sirius Real Estate Limited Annual Report and Accounts 2022
Health and wellbeing
Health and wellbeing have always been key priorities for us and
remain at the heart of our engagement with our colleagues, in
particular in the context of how the Covid-19 pandemic has
shifted the way in which we work. A focus on mental and
physical health and the emphasis on work–life balance has
become central to our employee wellbeing programmes.
We are pleased we have been able to support our colleagues
with flexible working hours and continue to review our flexible
working arrangements. We also provide training opportunities
in mental health aspects such as dealing with change, time
management and communication. We also recognise that
physical health is as important as mental health and we offer
access to fitness facilities and weekly yoga sessions, as well as
group events related to running, volleyball and more, which
have the added benefit of supporting and creating a positive
team dynamic.
The implications of the Covid-19 pandemic have also influenced
how we supported and engaged with our colleagues. This year
we continued to provide rapid antigen tests, personal protective
equipment and hand disinfectant at all of our sites and hygiene
measures have remained in place to ensure our colleagues could
work safely. We also worked hard to ensure they were kept up to
date with regular communication from HR on the pandemic,
precautionary measures and the relevant legal requirements.
Our health and safety focus is also reflected in our extensive
training programme with instructions on fire protection and
occupational safety included. We also provided first aid training
for a total of 103 employees in the year.
Training and development
Our training and development programme is central to our
engagement with our employees, and a core part of our
commitment to providing a positive environment in which
they can grow and develop their interests and careers. We
recognise that training and career development opportunities are
important for our employees, as was also flagged in our annual
employee survey. We have invested €146,046 in employee
training in this financial year, representing 996 days of training
across the Company (up from 644 in the year to March 2021).
Wewillcontinue to explore ways to extend and grow
our programme.
The training and development programme covers a wide range
of subjects and disciplines. Some topics are mandatory for all
our employees to support our governance efforts, including
anti-bribery and corruption, modern slavery, anti-discrimination
training and data protection. This year our competencies and
behaviours roll-out has also featured in the training programme,
with which we aim to reach all of our employees in the
currentyear.
We also strongly encourage our employees to explore their
interests and talents, either through seeking new degrees and
qualifications, or through engaging with our training platform, the
Sirius Academy. The Sirius Academy enables knowledge sharing
across our Company, with employees offering seminars and
workshops based on their area of expertise. In addition to
providing cross-functional and divisional insight into how Sirius
works and what our colleagues do, it also enables an exchange of
ideas and helps promote our collaborative culture. Some of the
topics covered this year have included self-defence for women,
fundamentals of real estate law and communication with tenants.
Engagement
Our annual employee survey, and the accompanying CEO
Forums which follow, is the centrepiece of our employee
engagement, and allows us to benchmark our activities and
engagement. We intend on extending theemployee survey to
also include the BizSpace team as ofJune 2022, so that all
employee opinions are considered aswedevelop our strategy
and engagement programmes. Justas important as this is the
day-to-day interaction across ourbusiness and ensuring there
are mechanisms in place for usto gather insight and feedback,
such as our annual survey. Engagement is particularly important
to us, given our wider goal for all of our employees to be able to
participate more in the success of Sirius through ownership.
Currently 101 of our colleagues, representing 35% of the
workforce, areshareholders.
While people are core to our business success, we also
continue to develop our approach to creating a positive social
impact, both inside and outside the Company, which also
includes working with our tenants. In June 2021, we conducted
a tenant survey in which 4,820 of our tenants took part with
representatives from our top 50 by revenue, as well as SME
office, SME warehouse, First Choice Business Centre (“FCBC”)
and self-storage. In addition to operational issues such as
quality of service, cleanliness and reliability, we also explored
our engagement, Covid-19 and wider sustainability issues
including waste management, emissions reduction and
biodiversity. We were pleased to see that our tenants
recognised our efforts and the support we provide on a
day-to-day basis and in recognition of thepandemic.
Community
As part of our ambitions to have an overall positive impact on
the planet and society, we recognise the importance of effective
community engagement, understanding local needs and
adapting our approach and business activities, including
acquisition and development projects, to minimise any potential
negative impact on local communities.
We also express our care through various charitable initiatives.
In addition to involving our colleagues in our engagement with
charities and donations, including sporting events and
fundraising initiatives, we also contribute to our local
communities at a business level. During the year we have
supported a number of different organisations including
educational non-profit A Bleistift FOR EVERYONE, the Berlin
City Mission, which engages in social work projects across the
city, and local community shelters in Berlin. We also regularly
encourage our employees to participate in the “Post mit Herz”
campaign and send letters or postcards to those lonely or
isolated in nursing homes, hospitals or hospices. Sirius has also
been involved in the “Christmas in a Shoebox” campaign since
2018, and this year, in collaboration with our tenants and
employees, filled 119 shoeboxes together.
Beyond ongoing donations, we also take action when local
needs arise. Against the backdrop of the flood disaster in
Ahrweiler in July 2021, Sirius called on its employees to
participate in a fundraising campaign and immediately offered
its help to Caritasverband Düsseldorf e.V. by making storage
space available.
46
Sirius Real Estate Limited Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
Ethical
As we have communicated, our purpose is to “empower
business and unlock potential”. This includes conducting our
business in an honest and ethical manner. How we behave to
our employees and all our stakeholders is core to our business
growth and clearly represented through our purpose, values
and culture. At the centre of our ethics is how we govern and
manage our Company through the Board and our Sustainability
and Ethics Committee and throughout the organisation, as well
as the policies we promote and live by and the relationships and
transparency we maintain with our stakeholders.
We have a clear set of policies that are available to all our external
stakeholders and promoted to all employees via the employee
handbook, our monthly impact newsletter and the training and
development programme. A summary of our policies follows, and
they are available in full directly from our Company Secretary and
from our website. These policies have been actively overseen
and reviewed by the Board, the Sustainability and Ethics
Committee and the asset management team during the year.
Code of Conduct
All of our employees in Germany receive training on the General
Equality of Treatment Act (Allgemeines Gleichbehandlungsgesetz)
and how to adhere to the Sirius Code of Conduct which explains
the expectations of everyone working for the Group, in terms of
responsibility to each other and to our business partners and
stakeholders. Our Code of Conduct also carries clear statements
on modern slavery, which is also included in all our contracts
with our suppliers.
Modern slavery
Sirius is committed to identifying and tackling the potential
exploitation of vulnerable workers within the Group and
oursupply chain. Sirius has adopted a risk-based approach
andcontinually assesses the adequacy of the anti-slavery
measures to provide assurance that we are leveraging our
influence to thegreatest effect. The Modern Slavery Statement
was republished on 31 March 2022. We have found no
instances of modern slavery within the Group or across our
supply chain in this financial year, nor over the last three years.
Anti-bribery and Corruption Policy
We uphold all laws relevant to countering bribery and corruption
in all the jurisdictions in which we conduct business. We take a
zero tolerance to all forms of bribery and corruption, and we are
committed to maintaining proportionate, risk-based procedures
designed to prevent persons associated with our business from
undertaking such conduct. The Anti-bribery and Corruption
Policy, training and procedure are now embedded across the
Group and there have been no material cases to date.
Anti-discrimination and Diversity Policy
We value diversity in our structure, ways of working and ways
ofthinking. We fully recognise that diversity means a wealth
ofideas, creativity, enrichment and growth. Differences in terms
of origin, gender, age, sexual orientation, religion or ideology
aremet with the highest acceptance and appreciation. We
expressly declare that we will not discriminate against any
person on the grounds of origin, gender, religious belief,
disability, age, sexual orientation and identity, or other physical
characteristics. We want to promote diversity, prevent unequal
treatment and create equal opportunities. We have a “zero
tolerance policy” against discrimination and unequal treatment.
Supplier Code of Conduct
We see ourselves as a business partner with integrity, reliability
and a sense of responsibility. We endeavour to make sure that
our actions are held to the highest quality standards, and we
expect our trade and business partners to be subject to the
same standards. We believe our responsibility can only be
sustainable if our business partners share and are compliant
with the requirements of our guidelines. Our Supplier Code
ofConduct is based on the United Nations Global Compact
(“UNGC”), the International Labour Organisation (“ILO”) and
theUniversal Declaration of Human Rights (“UDHR”).
Health and Wellbeing Policy
We are responsible for ensuring that the health of our
employees does not suffer as a result of the work they are
required to conduct or the working conditions they are required
to work in. We are very much aware of this responsibility and
take measures to preserve, protect and strengthen both the
physical and mental health of our employees.
Sustainability Policy
We are committed to operating in a sustainable and
economically responsible way and look to achieve that through
governance, social and environmental policies. These are
deeply embedded in the management of the Company and
ensure the highest standards of business conduct. Our actions
are shown through our sustainability framework and our
continuing development of our ESG programme.
Whistleblowing Policy
We are committed to the highest standards of openness,
integrity and accountability and we do everything possible to
prevent and deter misconduct and violations of law within the
Company. We have an “Open Door Policy” and a tailored email
address to make it as easy as possible for employees as well as
persons who are in contact with Sirius on all business levels to
be able to report possible misconduct without being exposed to
the risk of having to fear disadvantages in their professional or
private life. There have been no instances of whistleblowing
within the Group or across our stakeholders during this financial
year, nor over the last three years.
Cyber Security Policy
Sirius prioritises cyber security and resilience with
representation at Board level. We are continuously assessing
our risks and working to mitigate current and emerging threats,
with risk and vulnerability management life cycles integrated
into our cyber practices. External supply chain risks are also
carefully managed and mitigated. Internal cyber training is given
to all Sirius employees, including the Sirius Senior Management
Team, and tested annually.
There is a comprehensive Information Security Management
System (“ISMS”) in place supported by the Company’s
Information Security Policies. These policies are mapped to the
UK Government’s Cyber Essentials scheme and comply with
theUK Government’s National Cyber Security Centre (“NCSC”)
guidance and best practices. Compliance with both EU and
UKversions of GDPR is also constantly reviewed and assured.
The last audit of cyber security was undertaken by a CREST
accredited company in December 2021.
There is operational responsibility through
the IT Committee, which meets regularly
and reports quarterly to the Board.
Wehave had zero instances of an
information security breach during this
financial year and over the last three years.
Strategic report Governance Financial statements
47
Sirius Real Estate Limited Annual Report and Accounts 2022
Strong profits and total
shareholder accounting return
in transformational year
Strong trading, growth and diversification
The Company delivered profit before tax of €168.9 million for
the year ended 31 March 2022 representing a 3.2% increase
onthe prior year. Despite markets and our tenants continuing
tobe affected by the lingering effects of the Covid-19 pandemic,
the Company recorded a transformative year in which it
achieved significant organic andacquisitive growth and issued
its first corporate bonds. In addition, the Company completed
the acquisition of BizSpace inNovember 2021 representing the
first significant corporate transaction in the Company’s history
and its first entry into anew market outside of Germany.
Total funds from operations
(1)
(“FFO”), which is the key measure
used by Sirius for operational performance, increased by 22.5%
to €74.6 million, which drove a 19.7% increase in the dividend
for the six months ended 31 March 2022. The increase in
adjusted net asset value per share
(2)
combined with dividends
paid in the period resulted in a total accounting return of 20.0%
(31 March 2021: 19.5%).
Trading performance and earnings
As mentioned above, the Company reported a profit before tax in
the year ended 31 March 2022 of €168.9 million (31 March 2021:
€163.7 million), representing an increase of 3.2%. FFO increased
by 22.5% to €74.6 million (31 March 2021: €60.9 million) with
BizSpace contributing €5.8 million in respect of the 4.5 months
of ownership following the completion of the acquisition on
15November 2021. Along with the impact from BizSpace,
theincrease in FFO came from a combination of strong organic
growth within the existing portfolio in Germany together with
amodest contribution from assets acquired in the period.
Further detail on the Company’s financial performance and
contribution from BizSpace in the year ended 31 March 2022
isset out below.
Germany
€m
UK
€m
Group
€m
Net operating income 109.1 13.4 122.5
Funds from operations 68.8 5.8 74.6
Profit after tax 138.7 9.3 148.0
(1) Refer to note 29 in the Annual Report and Accounts 2022.
(2) Refer to Glossary of terms of the Annual Report and Accounts 2022.
“ Sirius has delivered another
strong return for shareholders
through a combination of
continued organic and acquisitive
growth in Germany, the acquisition
of BizSpace in the UK and the
issuance of €700 million in
corporate bonds.”
Diarmuid Kelly
Chief Financial Officer
48
Sirius Real Estate Limited Annual Report and Accounts 2022
FINANCIAL REVIEW
The organic growth within Germany came predominantly from another strong improvement in like-for-like annualised rent roll which
increased by 6.4% and was supported by a combination of ongoing capex investment programmes, contracted escalations, uplifts on
renewals and other asset management initiatives. Following completion of the acquisition of BizSpace, the Company starts the new
financial year with annualised rent roll of €167.0 million.
Whilst the Company’s basic and diluted earnings per share figures were impacted by one-off costs relating to the acquisition of
BizSpace and refinancing activity, significant growth was recorded in adjusted earnings, basic EPRA earnings and diluted EPRA
earnings. The impact of costs relating to the repayment of secured debt facilities using proceeds from the corporate bond issuances,
the BizSpace acquisition and write off of the related goodwill resulted in a 4.8% decrease in basic EPS to 13.48c per share. Adjusted
EPS, Basic EPRA EPS and Diluted EPRA EPS which exclude the impact of the one-off effects described above, increased by
approximately 15.6%, 14.4% and 14.5% respectively reflecting the strong operational performance in the year.
Earnings
€000 No. of shares
31 March 2022
cents per share
Earnings
€000 No. of shares
31 March 2021
cents per share
Change
%
Basic EPS 147,873 1,097,082,162 13.48 147,451 1,040,956,722 14.16 (4.8)
Diluted EPS 147,873 1,112,360,781 13.29 147,451 1,056,541,472 13.96 (4.7)
Adjusted EPS* 71,125 1,097,082,162 6.48 58,400 1,040,956,722 5.61 15.6
Basic EPRA EPS 70,695 1,097,082,162 6.44 58,633 1,040,956,722 5.63 14.4
Diluted EPRA EPS 70,695 1,112,360,781 6.36 58,633 1,056,541,722 5.55 14.5
* See note 12 and the Business analysis section of the Annual Report and Accounts 2022.
Total revenue, which comprises rent, fee income relating to Titanium, other income from investment properties, and service charge
income, increased from €165.4 million to €210.2 million in the period. Annualised rent roll in Germany increased by 17.8% from
€96.5 million to €113.7 million with acquisitions contributing €11.0 million with organic growth contributing €6.2 million. The
acquisition of BizSpace resulted in rent roll increasing by €49.6 million with organic growth since the date of completion contributing
an additional €3.7 million in annualised rent roll.
Germany
€m
UK *
€m
Group
€m
Opening annualised rent roll 96.5** — 96.5
BizSpace acquisition — 49.6 49.6
Additions 11.0 — 11.0
Move-ins/outs 3.3 1.6 4.9
Uplifts 2.9 2.1 5.0
Closing annualised rent roll 113.7 53.3 167.0
* Translated at GBP:EUR rate (1.18) as of 31 March 2022.
** Annualised rent roll €96.5 million when excluding the expected move-out in the first half of the March 2022 financial year relating to the Fellbach II
acquisition which completed in March 2021.
Looking forward, notwithstanding the ongoing potential impact of Covid-19 and the conflict in Ukraine, the Company is confident
that through the continuation of its capex investment programmes and wide range of other intensive asset management initiatives,
it will continue to grow FFO organically in the new financial year.
Furthermore, following the Company’s financing activity detailed within this report, the Company considers itself to have a strong
balance sheet and the financial capability to continue its acquisitive strategy across the markets in which it operates as and when the
right opportunities present themselves.
BizSpace
The Company was pleased to complete the acquisition of BizSpace in November 2021 for a cash consideration of approximately
£245.0 million, based on an enterprise value of £380.0 million and representing a 7.1% net operating yield. The Company funded the
transaction by stepping into the BizSpace existing financial debt amounting to approximately £146.0 million, raising £137.0 million
through a successful equity raise that resulted in 105 million shares being issued and utilising existing cash resources. Following
completion, the Company repaid the existing debt within BizSpace using proceeds generated from its second corporate bond issuance.
As a leading provider of regional flexible workspace across the UK, BizSpace has provided Sirius with an opportunity to diversify
geographically at scale through the single acquisition of an established platform. The transaction provides a number of organic
growth opportunities, overlaid with meaningful operational and financial synergies which the Company continues to realise through
its ongoing integration efforts.
Within the 4.5 month period of ownership trading has been strong with like-for-like annualised rent roll increasing by 7.6% from
£41.9 million to £45.1 million. Over the same period, occupancy increased to 90.5% (excluding Ipswich which is unoccupied) from
88.7% whilst like-for-like average rate per sq ft has increased by 6.5% from £10.98 per sq ft to £11.69 per sq ft, highlighting the
opportunity to capture the strong growth seen in rental pricing in the UK industrial property market. For further detail please see
theAsset management review – UK section on page 34 of this report.
Sirius has also converted the UK business into a UK Real Estate Investment Trust (“REIT”) with effect from 1 April 2022, resulting
inBizSpace no longer being subject to UK corporation tax on income from its property rental business, as well as on profits on
disposals of assets.
Strategic report Governance Financial statements
49
Sirius Real Estate Limited Annual Report and Accounts 2022
Portfolio valuation – Group
The portfolio of owned assets was independently valued at €2,079.0 million by Cushman & Wakefield LLP at 31 March 2022
(31March 2021: €1,350.8 million), which converts to a book value of €2,100.0 million after the adjustments in relation to lease
incentives and inclusion of leased investment property. A breakdown of the movement in owned and leased investment property,
excluding assets held for sale, is detailed in thetable below.
German investment
property – owned
€000
German investment
property – leased
€000
UK investment
property – owned
€000
UK investment
property – leased
€000
Investment
property – total
€000
Investment properties at book value
asat31March2021* 1,347,167 15,025 — — 1,362,192
Acquisitions arising from business combinations — — 408,923 12,182 421,105
Additions relating to owned investment properties 162,844 — — — 162,844
Additions relating to leased investment properties — 2,587 — 779 3,366
Capex investment and capitalised broker fees 20,464 — 2,143 — 22,607
Reclassified as investment property held for sale (13,739) — (13,739)
Disposal — — (1,808) — (1,808)
Surplus on revaluation above capex investment
andbroker fees 106,982 — 40,035 — 147,017
Deficit on revaluation relating to leased
investmentproperties — (5,548) — (24) (5,572)
Adjustment in respect of lease incentives (561) — — — (561)
Currency effects — — 2,476 77 2,553
Investment properties at book value
asat31March 2022* 1,623,157 12,064 451,769 13,014 2,100,004
* Excluding assets held for sale.
The movement in owned investment property relating to the German portfolio of €276.0 million was made up of €162.8 million of
asset acquisitions, €13.7 million of disposals, a €107.0 million valuation uplift, capital expenditure of €20.5 million and a €0.6 million
adjustment in respect of lease incentives.
The movement in owned investment property relating to the 4.5 month period of ownership of the UK portfolio of €42.8 million was
made up of a €1.8 million of disposals, a €2.5 million foreign currency effect, a €40.0 million valuation uplift and capital expenditure
of €2.1 million.
In accordance with IFRS 16, the Group recognises leased investment properties amounting to €12.1 million relating to the German
portfolio and €13.0 million relating to the UK portfolio which meet the definition of investment property. Accordingly, an expense of
€5.6 million representing the fair value adjustment in the year was recorded in the income statement. During the year under review
the Group extended a lease on an asset in Germany meeting the definition of investment property resulting in an increase in the
carrying value of €2.6 million.
The total valuation gain recorded in the income statement of €140.9 million includes movements relating to both owned and leased
investment property and is stated net of capex investment, broker fees and adjustments in respect of lease incentives.
Portfolio valuation – Germany
Focusing on the like-for-like portfolio that was owned for the full period, the book value of these assets increased by €127.2 million
or9.4% from €1,347.2 million to €1,474.4 million. The increase in book value for the period was predominantly driven by an increase in
annualised rent roll of €6.2 million and approximately 20 bps of gross yield compression. The assets that were acquired during the year
end were revalued at only €0.2 million below the total acquisition costs paid, which is 7.1% above the property purchase prices paid.
The portfolio of owned properties comprised 69 assets at 31 March 2022 and the reconciliation of book value to the independent
Cushman & Wakefield LLP valuation is as follows:
31 March 2022
€m
31 March 2021
€m
Investment properties at market value* 1,627.3 1,350.8
Adjustment in respect of lease incentives (4.1) (3.6)
Book value of investment properties as at 31 March 2022* 1,623.2 1,347.2
* Excluding assets held for sale.
The 31 March 2022 book value of owned investment properties of €1,623.2 million represents an average gross yield of 6.9%
(31March 2021: 7.2%), which translates to a net yield of 6.2% (31 March 2021: 6.5%) and an EPRA net yield (including estimated
purchaser costs) of 5.9% (31 March 2021: 6.1%).
50
Sirius Real Estate Limited Annual Report and Accounts 2022
FINANCIAL REVIEW CONTINUED
Despite yields continuing to tighten, the average gross yield of the German portfolio of 6.9% still appears conservative when
compared to transactions that have completed over the last year in the industrial, logistics and office sectors in Germany but also
inpart reflects the work yet to be done in transforming more recently acquired assets.
As a result of acquisitive growth, 67% of the German portfolio represents value-add assets which, with average occupancy of 80.8%
and valued at a gross yield of 7.3%, provide significant opportunity for further earnings and value growth. The mature assets which
make up about one-third of the German portfolio have reached an occupancy level of 95.5% and, at a gross yield of 6.1%, are valued
at a yield that is 120 bps lower than the value-add assets. As the transformation of the value-add assets continues, the yield gap
between the mature and value-add assets is expected to reduce.
Annualised
rent roll
€m
Book value
€m
NOI
€m
Capital
value
€m/sqm *
Gross yield *
%
Net yield *
%
Vacant
space
sqm *
Rate psqm
€ *
Occupancy
% *
Value-add assets** 79.9 1,089.6 69.6 804 7.3% 6.4% 252,430 6.27 80.8%
Mature assets 32.6 533.5 32.0 1,156 6.1% 6.0% 19,786 6.44 95.5%
Other — — (1.1) — — — — — —
Total 112.5 1,623.2 100.5 893 6.9% 6.2% 272,216 6.31 84.2%
* Expressed as averages.
** Excluding assets held for sale.
The average capital value per sqm of the entire portfolio of €893 (31 March 2021: €863) remains well below replacement cost
andillustrates the excellent opportunity for further growth from upgrading and letting up the sub-optimal vacant space through the
Company’s capex investment programmes. This remains a major competitive advantage for Sirius and is 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 in all market conditions. The full details of the capex investment programmes are provided in the Asset management
review – Germany section of this report.
Portfolio valuation – UK
Since the acquisition of BizSpace on 15 November 2021 the book value of the UK portfolio has increased by £36.7 million or 10.6%
from £345.5 million to £382.2 million. Encouragingly, the significant increase in book value was primarily driven by strong annualised
rent roll growth amounting to £3.2 million or 7.6% in the 4.5 month period of ownership together with some yield compression.
The 31 March 2022 book value of owned properties of £382.2 million represents an average gross yield of 11.8% (15 November 2021:
12.1%), which translates into a net yield of 8.0% (15 November 2021: 8.0%) and an EPRA net yield (including estimated purchaser
costs) of 7.5%. Despite yields continuing to tighten as a result of increased demand and limited supply, the average gross yield of
the UK portfolio of 11.8% still appears conservative when compared to transactions that have completed over the last year in the
light industrial, mixed-use and office sectors in the UK.
Annualised
rent roll
£m
Book value
£m
NOI
£m *
Capital
value
£m/sq ft
Gross yield
%
Net yield
%
Vacant
space
sq ft
Rate psqft
£
Occupancy **
%
UK portfolio 45.1 382.2 30.5 88 11.8% 8.0% 406,132 11.69 90.5%
* Based on the 4.5 months from 15 November 2021 to 31 March 2022 annualised.
** Excluding the Ipswich asset, which is unoccupied.
As set out above, the average capital value per sq ft of the UK portfolio remains well below replacement cost at £88 per sq ft
(15November 2021: £79 per sq ft). Similarly, with 406,132 sq ft of vacant space and an undemanding average rate of £11.69 per sqft
significant opportunity exists for the UK operating platform to increase rental and capital values further.
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51
Sirius Real Estate Limited Annual Report and Accounts 2022
52
Sirius Real Estate Limited Annual Report and Accounts 2022
Net asset value
The valuation increases along with profit retention resulted in an increase in net asset value per share to 102.04c at 31 March 2022,
an uplift of 15.5% from 88.31c as at 31 March 2021. Similarly, the adjusted net asset value
1
per share increased to 108.51c at
31March 2022, an uplift of 15.7% from 93.79c as at 31 March 2021. In addition, the Company paid out 4.02c per share of dividends
during the financial year which contributed to a total shareholder accounting return (adjusted NAV growth plus dividends paid) of
20.0% (31 March 2021: 19.5%). The movement in NAV per share is explained in the following table:
Cents per share
NAV per share as at 31 March 2021 88.31
Recurring profit after tax 6.10
Equity raise 5.26
Surplus on revaluation 12.55
Deferred tax charge (1.27)
Scrip and cash dividend paid (3.76)
Adjusting items (5.15)*
**NAV per share at 31 March 2022 102.04
Deferred tax and derivatives 6.47
Adjusted NAV per share at 31 March 2022
(1)
108.51
EPRA adjustments
(2)
(1.23)
EPRA NTA per share at 31 March 2022
(1)
107.28
* Adjusting items includes non-recurring items including restructuring costs, share of profit in associates, gains and losses on investments, and
foreign currency effects.
(1) Excludes the provisions for deferred tax and derivative financial instruments.
(2) See Annex for further details.
The EPRA NTA per share, which, like adjusted NAV per share, excludes the provisions for deferred tax and fair value of derivative
financial instruments but also includes the potential impact of shares issued in relation to the Company’s long-term incentive
programmes and excludes intangible assets, was 107.28c, an increase of 16.2% from 92.29c as at 31 March 2021.
Financing
As communicated last year to shareholders the Company had been assessing opportunities to optimise its funding structure to
support its future growth ambitions. The Company’s inaugural bond issuance in June 2021 followed the award of a BBB stable
investment grade credit rating from Fitch in May 2021. Bonds totalling €400.0 million were issued attracting a coupon of 1.125%
with a maturity date of June 2026. In November 2021 the Company issued bonds amounting to €300.0 million attracting a coupon
of 1.75% with a maturity date of November 2028.
The bond issuances coupled with the repayment of €340.2 million of existing secured debt, inclusive of €169.6 million that the
Company stepped into and subsequently repaid as part of the BizSpace transaction, has transformed the Company’s balance sheet
and provided it with several benefits including:
» financial capacity to fund acquisitions and other investment opportunities;
» reduction in the Group’s weighted average cost of debt to 1.4% (31 March 2021: 1.5%);
» increase in the Group’s weighted average term of debt to 4.3 years (31 March 2021: 2.7 years); and
» increase in the number of unencumbered assets to 127, with a book value of €1.6 billion.
Following the bond issuances and related secured debt repayments, the Group holds total debt amounting to €995.6 million, of
which €750.0 million (or 75%) is unsecured (31 March 2021: 11%). The transformation of the Group’s financing arrangements is
expected to have a positive impact on earnings, facilitate asset recycling and reduce annual amortisation payments.
Net LTV, which excludes restricted cash balances, was 41.6% (31 March 2021: 31.4%) whilst interest cover at EBITDA level was 7.3x
as at 31 March 2022 (31 March 2021: 9.9x). All covenants were complied with in full during the period. A summary of the movement
in the Group’s debt is set out below:
Movement in debt
€000
Total debt as at 31 March 2021 472,032
Bond issuances 700,000
Draw down of credit facility 50
Repayment of credit facility (50)
Repayment of secured facilities (170,709)
Assumed BizSpace debt 169,500
Repayment of BizSpace debt (169,500)
Scheduled amortisation (5,766)
Total debt as at 31 March 2022 995,557
FINANCIAL REVIEW CONTINUED
Strategic report Governance Financial statements
53
Sirius Real Estate Limited Annual Report and Accounts 2022
Dividend
The Board has authorised a dividend in respect of the second half of the financial year ended 31 March 2022 of 2.37c per share,
representing a pay-out of 65% of FFO and an increase of 19.7% on the equivalent dividend last year which was also based on 65%
of FFO. The total dividend in respect of the financial year is 4.41c, an increase of 16.1% on the 3.80c total dividend paid in respect of
the financial year ended 31 March 2021.
The table below shows the dividends paid and full year pay-out ratios over the last five years, demonstrating the manner in which
the Board chose to increase the dividend pay-out ratio in previous years in order to maintain positive dividend trajectory whilst the
proceeds of asset disposals were invested.
First half dividend
per share
cents
Second half
dividend
per share
cents
Total dividend
per share
cents
Blended
pay-out ratio
% of FFO
Year ended March 2018 1.56 1.60 3.16 75%
Year ended March 2019 1.63 1.73 3.36 70%
Year ended March 2020* 1.77 1.80 3.57 66%
Year ended March 2021 1.82 1.98 3.80 65%
Year ended March 2022 2.04 2.37 4.41 65%
* First half 67%, second half 65% of FFO.
It is expected that, for the dividend authorised in respect of the six-month period ended 31 March 2022, the ex-dividend date will be
6 July 2022 for shareholders on the South African register and 7 July 2022 for shareholders on the UK register. The last day to trade
is the day prior to the ex-dividend date, 5 July 2022 and 6 July 2022 for shareholders on the South African and UK register
respectively. It is further expected that for shareholders on both registers the record date will be 8 July 2022 and the dividend will be
paid on 18 August 2022. A detailed dividend announcement will be made on 20 June 2022, including details of a scrip dividend
alternative. At the date of the results announcement relating to the year to 31 March 2022, the number of ordinary shares in issue
was 1,172,160,992.
Summary
Despite challenging market conditions, the year to 31 March 2022 proved transformational for Sirius as the Company recorded strong
trading results whilst growing acquisitively, issuing two corporate bonds and entering the UK market. Whilst one off costs and the
write off of goodwill impacted earnings the Group has delivered significant increases in income and valuations while maintaining high
cash collection rates. Organic growth in annualised rent roll, further improvements to service charge recovery and the impact of the
BizSpace acquisition were the primary drivers behind the Group’s increase in FFO and dividend. With ten assets acquired or
notarised in Germany in the year under review the Company expects a greater impact from these assets on earnings in the new
financial year whilst the positive trading trajectory of BizSpace provides further income growth opportunities, with considerable
further trading flexibility and tax benefits arising from the conversion of BizSpace to a REIT.
The Company remains focused on maximising the capability of its internal operating platforms to continue to deliver attractive
risk-adjusted returns through active asset management. Looking forward the Company will take a well-balanced and measured
approach whilst trading through what continue to be uncertain times. Despite positive developments over recent months, the
recovery from the Covid-19 pandemic continues to present challenges whilst the economic, political and human fallout from the
ongoing conflict in Ukraine is yet to be fully understood. Growing concerns about inflation, particularly that in relation to utilities and
expected interest rate increases, will no doubt create challenges; however, following the successful bond issuances during the year
under review the Company’s financial profile has never been stronger whilst its internal operating platform has proven itself to be well
capable of adapting to changing market conditions. With acquisition firepower available, further vacancy to develop and reversion
potential to capture, as well as a defensively positioned portfolio, the Company is well set to meet the challenges ahead and looks
forward to continuing to deliver attractive and sustainable returns for shareholders in the future.
Diarmuid Kelly
Chief Financial Officer
10 June 2022
54
Sirius Real Estate Limited Annual Report and Accounts 2022
PRINCIPAL RISKS AND UNCERTAINTIES
Managing our risks
Sirius has policies and procedures in place for the timely identification,
assessment and prioritisation of the Group’s material risks and uncertainties.
This section describes how these risks are identified, managed and
mitigated appropriately in order to deliver the Group’s strategic objectives.
Risk management framework
The Group has an established risk management approach to
identify, monitor and mitigate risks. The Sirius Board has overall
responsibility for risk management and is of the view that
understanding and mitigating key risks is crucial to achieving
the Group’s strategic objectives and long-term success. As
such, a risk-based approach is taken on all major decision
making and strategic initiatives.
Risk management is an integral part of the Group’s business and
risks are considered at every level of decision making and across
all business activities. A risk management framework is in place
to ensure that risks are identified and mitigated in order to
significantly increase the chances of being able to achieve the
Group’s objectives of creating and sustaining shareholder value.
A detailed and extensive risk register is maintained that
documents risks and related mitigating controls and sets out
the frequency with which the risks are reviewed and by whom.
The process supporting the risk register includes detailed annual
evaluations performed by subject matter experts within the Group.
The principal risks are determined, assessed and catalogued
according to their likelihood of occurring and potential impact
on the business.
Finally, the risk register documents the controls in place
thatexist to mitigate the particular risk.
The Audit Committee takes responsibility for the review of
therisk management methodology and the effectiveness
ofinternal controls and the Board reviews the risk register
onanannual basis.
This process includes the following:
» reviewing regular risk reporting prepared
bytheSeniorManagement Team;
» assessing the effectiveness of control design
andimplementation; and
» overseeing and advising the Board on current
riskexposuresand future risk strategy.
Risk management
processdiagram
Identify
Assess
MitigateMonitor
Report
“ Risk management is an integral
part of the Group’s business and
risks are considered at every level
of decision making and across all
business activities.”
Strategic report Governance Financial statements
55
Sirius Real Estate Limited Annual Report and Accounts 2022
Risk management
framework diagram
Board of Directors
» Overall responsibility for risk management.
» Overall responsibility for the Group’s system of internal
control and review of its effectiveness.
Audit Committee
» Delegated responsibility from the Board to oversee
riskmanagement and internal controls.
» Reviews the effectiveness of the Group’s internal
controland risk management processes.
» Monitors the independence and expertise of the
externalauditors.
Executive Directors
» Perform key business activity reviews, identify control
deficiencies and redesign processes.
» Monitor the role and effectiveness of internal compliance.
» Communicate risk management information and key
initiatives across the Group.
Senior Management Team and
CompanySecretary
» Define risk management responsibilities at operational
andkey initiative level.
» Ensure risk is considered in all business decision making.
» Continuously identify risks, provide assurance and
self-assess.
Board of
Directors
Audit Committee
Executive
Directors
Compliance
Senior Management Team
56
Sirius Real Estate Limited Annual Report and Accounts 2022
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risks summary
Risk area Principal risk(s)
1 Financing » Availability and pricing of debt
» Compliance with loan facility covenants
» Availability and pricing of equity capital
» Reputational risk
2 Valuation » Property inherently difficult to value
» Susceptibility of property market to change in value
3 Markets » Participation within two geographically diverse markets
» Reliance on specific industries and SME market
» Reduction in occupancy
4 Acquisitive growth » Decrease in number of acquisition opportunities coming to market
» Failure to acquire suitable properties with desired returns
5 Organic growth » Failure to deliver capex investment programmes
» Failure to refuel capex investment programmes
» Failure to achieve targeted returns from investments
6 Customer » Decline in demand for space
» Significant tenant move-outs or insolvencies
» Exposure to tenants’ inability to meet rental and other lease commitments
» Tenant affordability
7 Regulatory and tax » Non-compliance with tax or regulatory obligations
8 People » Inability to recruit and retain people with the appropriate skillset to deliver the Group strategy
9 Systems and data » System failures and loss of data
» Security breaches
» Data protection
10 Macro-economic
environment
» Impact of the Covid-19 pandemic
» Inflationary pressure leading to increased costs
» Interest rate movements impacting the commercial real estate market
» Delays in cash collection and tenant insolvencies
11 ESG » Unforeseen costs relating to physical and transition risks associated with climate change
» Reputational risk
» Failure to meet shareholder and societal requirements or expectations
12 Foreign currency » Financial impact of uncontrollable foreign currency fluctuation on earnings and net asset value
Current assessment of principal business
riskspost mitigation
Previous assessment of principal business
risks post mitigation
Impact
Low High
Likelihood
Low High
1
12
2
3 5
6
11
7
8
4
9
10
Impact
Low High
Likelihood
Low High
1 2
3
5
6
7
8
4
9
Strategic report Governance Financial statements
57
Sirius Real Estate Limited Annual Report and Accounts 2022
1 Financing
Principal risks Potential impact
» Through increasing interest rates, bank financing my become
increasingly unavailable as the cost of debt increases.
» Should certain covenants be breached, lenders may recall debt
orenforce security over encumbered assets.
» Increase in cost of borrowing and reduction in Group profits.
» Inability to refinance when facilities expire.
» Increase in cost of raising capital and dilution of Group net assets.
» Requirement to dispose of assets at discounted values to service
debt obligations.
» Reduced ability to acquire new assets.
» Acceleration of the Group’s obligations to repay borrowings.
» Lender enforces security over the Group’s assets and restricts
cash flow to the Group.
» Reputational damage to the Company from providers of capital.
Mitigation Developments in the year
» The Group has established a number of strong banking
relationships with lenders which understand and value the manner
in which the Sirius business model mitigates risk.
» The Group invests significant time and resource in engagement
withshareholders and market participants on both a group and
individual basis.
» The Sirius track record, methodology and experience of its Senior
Management Team through the last downturn are valued highly
byproviders of capital.
» Equity capital is raised only when it is determined to be in the best
interests of the Company and shareholders to do so.
» Bank facilities are only entered into where attractive rates and long
facility terms can be secured.
» It is Group policy to mitigate interest rate risk by fixing or capping
interest rates on facilities.
» Loan facilities incorporate covenant headroom, cure provisions and
sufficient flexibility to facilitate asset management initiatives
including asset substitution.
» The Group operates a value-add business model which includes
investing in its assets and significantly improving net operating
income. This has the effect of further increasing covenant
headroom and significantly mitigating the risk of breaching
bankcovenants.
» Bank reporting is prepared and reviewed regularly.
» The Group policy is to maintain a net LTV ratio of 40% or below.
» The Group has materially increased the number and value of
unencumbered assets which are more liquid to sell or could be
injected into bank security pools if necessary.
» All loan facility covenants were met in full during the year with
theGroup increasing its interest covenant Group net operating
income level to 12.5 times.
» 97.0% of the total borrowings of €995.6 million have been fixed
with a fixed interest rate or swap and 3.0% are floating or hedged
with an interest rate cap.
» The weighted average cost of debt reduced to 1.4% from 1.5%
at31 March 2021.
» Weighted average debt expiry of 4.3 years is increased from
2.7years at 31 March 2021.
» The Group recorded a net LTV ratio of 41.6%, which includes
unrestricted cash balances of €127.3 million.
» The Group increased its number of unencumbered assets from
19 to 127 with a book value of €1,584.0 million.
Risk key
No change
Increased risk
Decreased risk
58
Sirius Real Estate Limited Annual Report and Accounts 2022
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
2 Valuation
Principal risks Potential impact
» Property assets are inherently difficult to value as there is no
standard pricing mechanism and there are many factors to consider.
As a result, valuations are subject to substantial uncertainty.
» Asset values decline as a result of lower affordability and demand
asa result of macroeconomic factors that lead to changes in
inflation and interest rates movements.
» Reported NAVs may not accurately reflect the value of
theportfolio.
» Reduced liquidity and impact on returns.
» Expected NAV growth may not materialise.
» Potential non-compliance with loan facility covenants.
Mitigation Developments in the year
» Valuations are conducted half yearly by an expert, independent
valuer in accordance with applicable standards.
» Valuations involve the use of valuation experts and are formally
presented to and reviewed by the Board and the Company’s Senior
Management Team.
» The German and UK property markets are closely monitored by
in-house specialists who form part of the Group’s operating platforms.
» The Group operates a value-add business model that is focused on
growing net operating income at the asset level through a variety of
intensive asset management activities.
» Average net yield of the German portfolio remained broadly flat
at6.2%.
» Average net yield of the UK portfolio was 7.4%.
» The like-for-like book valuation of the Group’s German assets
increased by €127.2 million or 9.4% predominantly as a result
ofincreases in net operating income.
» The book valuation of the Group’s UK assets increased by
€42.8million or 10.6% since acquisition on 15 November 2021
predominantly as a result of increases in net operating income.
3 Market
Principal risks Potential impact
» The Group’s property portfolio located in Germany and the UK
exposes it to two separate markets and economies.
» Whilst the Group has a diversified offering in both the German
andUK markets, it is susceptible to changes in competition,
demandand sentiment for its assets in the future.
» The Group’s total returns may be impacted by a general downturn
in the markets in which it operates.
» Profits and cash flows may reduce from lower demand for the
Group’s space offerings due to structural economic changes or
changes in tenant demand that may vary between markets.
» The value of the Group’s property assets may decline from the
lower demand for space highlighted above as well as changes in
the sentiment for industrial and warehouse assets that may vary
between markets.
Mitigation Developments in the year
» The Group’s portfolio located in Germany and the UK provides
geographic diversification.
» The Group offers multiple products in both the German and UK
markets to a broad range of tenants, from major blue-chip
corporations to private individuals. Many of the Group’s products
were designed for and proved desirable during the last downturn.
» The Group’s pricing policy is to be below the upper quartile of the
market so that during downturns it becomes the supplier of choice
because of its economical pricing.
» 38% of the Group’s annualised rent roll in Germany comes from its
top 50 tenants, which are generally highly invested and embedded
on the sites that they occupy.
» Most of the Group’s assets are concentrated around key economic
areas of Germany and the UK which are expected to be more
resilient in a downturn given their locations which are underpinned
by strong supply and demand fundamentals.
» The German economy, the largest in Europe, continued to grow,
supported by monetary policy and low unemployment.
» The UK economic recovery from the Covid-19 pandemic
accelerated throughout the year with the Government continuing
to communicate its intent on spreading economic opportunities
more evenly across the country, resulting in increased demand for
space across the UK.
» The Group is not materially dependent on any single economic
sector with the largest tenant representing 2.2% of total
annualised rent roll in Germany and 2.4% in the UK.
» The SME market, which the Group considers to be its core
tenantbase in both the German and UK markets, has remained
strong during the period under review with increasing levels of
occupier demand.
» 7.1% of the Group’s annualised rent roll in Germany comes from
government tenants.
» The Group continues to concentrate its investment activity in
markets where sound economics, prior experience, in-depth
knowledge of local demand drivers and operational synergies can
be derived.
Strategic report Governance Financial statements
59
Sirius Real Estate Limited Annual Report and Accounts 2022
4 Acquisitive growth
Principal risks Potential impact
» Inability to source and complete on assets that meet the Group’s
return expectations.
» Increased competition for high-yielding assets leading to
pricingpressure.
» The Group is unable to invest and, as a result, holds significant
cash reserves on its balance sheet awaiting this reinvestment
which may be dilutive to short-term earnings and cash flows.
» The Group overpays for assets or takes on additional risk in order
to acquire assets.
» The Group is unable to acquire value-add opportunities, thereby
reducing future shareholder accounting returns from current levels.
Mitigation Developments in the year
» The Group’s operating platform in Germany includes an acquisition
team which is focused specifically on sourcing potential acquisition
opportunities, analysing their suitability for purchase and presenting
those assets to the Chief Operation Decision Maker for further
review and consideration.
» The Group’s highly experienced German acquisition team in
Germany provides the Group with deep market connectivity
andaccess to potential investment opportunities.
» The Group has a strong track record of completing on acquisition
transactions and recycling opportunities.
» Through the Titanium venture with AXA IM Alts the Group has an
alternative source of capital from which to gain exposure to assets
with alternative returns profiles.
» Through the acquisition of BizSpace the Group has an alternative
market in which to invest.
» During the year under review the Group received and reviewed
787 investment opportunities in Germany which consisted of
both on and off-market opportunities.
» In Germany, a total of nine assets were acquired in the reporting
period totalling €162.1 million and one asset notarised for
completion after the year end totalling €39.8 million.
» The Company acquired 72 assets through the acquisition of
BizSpace in the UK on 15 November 2021.
5 Organic growth
Principal risks Potential impact
» Failure to identify and create capex investment programmes.
» Failure to complete investments in vacant space due to not
obtaining permissions or finding appropriate suppliers to complete
the works.
» Failure to realise targeted returns on investment from the capex
investment programmes.
» Unable to let up existing vacancy, vacated space or newly created
space from the capex investment programmes.
» Failure to refuel the capex programme through value-add
acquisitions and asset recycling.
» Income and valuation improvements do not meet expectations.
» The Group’s detailed site business plans and expected returns
arenot achieved.
» Total shareholder returns reduce.
Mitigation Developments in the year
» Sirius has many years of experience in reconfiguring space and
obtaining all necessary permissions as well as engaging appropriate
contractors at the right price. This significantly mitigates the risk of
not being able to deliver projects.
» This experience also provides substantial data on developing its
vacancy and the take-up of its and its competitors’ products in the
markets that it operates, so assessments and projections are based
on detailed information and knowledge.
» Extensive analysis is performed to assess demand and costs before
an investment decision is made to ensure each project meets local
demands and returns are realistic.
» The Group is continuing to invest in its German operating platform
as well as enhancing its UK platform.
» The acquisition of BizSpace included the purchase of an existing
platform and experienced management team.
» The Company continued its capex investment programme
onacquisitions that completed from April 2016. As at 31 March
2022, a total of 176,694 sqm of space had been fully refurbished
for an investment of €32.8 million and is currently generating
incremental annualised rent roll of €11.5 million on 76% occupancy.
» The Company continued to identify space suitable for investment
that is expected to be returned from vacating tenants. A total of
62,497 sqm of space has been identified for investment of
€15.8million that is expected to upgrade the space and generate
€4.4million in annualised rent roll.
» Following the acquisition of BizSpace in November 2021 the
Company has begun a detailed asset-level business planning
process that is expected to result in the identification of spaces
suitable for investment in future periods.
» For more details on our organic growth programme, see the case
studies within this report.
Risk key
No change
Increased risk
Decreased risk
60
Sirius Real Estate Limited Annual Report and Accounts 2022
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
6 Customer
Principal risks Potential impact
» Reduced tenant demand for the Group’s offerings and lower take-up
of vacant space.
» Substantial amount of vacating tenants or tenants
becominginsolvent.
» The Group’s products are considered unaffordable by tenants.
» Increased costs borne by tenants results in failure to meet their
leaseobligations.
» Reduction in profits, cash flows and property valuations if a
number of major tenants vacate or become insolvent in a short
time period.
» Potential loan facility covenant breaches should net operating
income orproperty values reduce significantly.
» Tenant defaults result in loss of income and an increase in void
costs and bad debts.
» Profit targets may not be met from inability to let up vacant space.
» Downward pressure on earnings and NAV.
Mitigation Developments in the year
» The Group’s pricing policy is to be below the upper quartile of the
market providing protection in challenging economic times.
» The Group has an experienced internal marketing and lettings team
working within the German market and is not reliant on third parties
The Group’s German enquiries are predominantly generated online
with a dedicated call centre and on-site teams converting on
average 13% of these leads into new lettings.
» The Company’s properties are staffed by employees who are
focused on servicing tenants’ needs.
» Dedicated relationship managers assigned to key tenants in
ordertounderstand their businesses and meet their changing
space requirements.
» Due to the nature of their businesses the major German tenants
aregenerally highly invested on site and have been in place for
manyyears.
» All prospective tenants in the Group go through a robust credit
check to provide comfort over their suitability and financial position.
» A full-time experienced cash collection team forms part of the
Group’s German and UK operating platforms.
» All lease agreements require tenants to provide deposits and/or
bank guarantees.
» The Company controls costs charged to tenants through a
combination of providing metering, procuring at scale and
utilisingforward purchasing agreements.
» The Company has continued to successfully let up vacant space
ithas taken on through recently acquired assets, demonstrating
continued high demand within the market.
» The cash collection rate in Germany was 98.4 % for the year
ended 31 March 2022.
» The cash collection rate was 99.6% for the 4.5 month period of
ownership for the UK.
» Like-for-like occupancy as at 31 March 2022 was 87.4% and
90.5% (excluding Ipswich which is unoccupied) for Germany
andthe UK respectively.
Strategic report Governance Financial statements
61
Sirius Real Estate Limited Annual Report and Accounts 2022
7 Regulatory and tax
Principal risks Potential impact
» Change of tax laws or practices as a result of base erosion
andprofitshifting initiatives (“BEPS”).
» Creation of permanent establishment for the property SPVs
inGermany.
» Change of tax rules relating to controlled foreign companies.
» Forfeiture of tax losses due to change of ownership.
» Change of tax rates or accounting practices applicable to
theCompany across all jurisdictions in which it operates.
» The non-compliance with laws, regulations and accepted practices
relating to all jurisdictions in which it operates including those which
relate the UK REIT regime.
» Substantially more corporate income tax payable on the Group’s
operating profits in Germany, the UK and the Netherlands.
» The levying of German trade tax on the profits of property SPVs.
» Adverse effect on the Group’s profitability, cash flows and net
asset values.
» Financial penalties and reputational damage.
» Forfeiture of tax losses resulting in more property SPVs paying
corporate income tax.
Mitigation Developments in the year
» The applicable tax laws and tax treatment of all Group entities
arecontinually monitored and assessed to ensure that taxes are
appropriately and accurately calculated and paid. Close collaboration
with advisers and relevant tax jurisdiction authorities ensures we
areaware of emerging issues and keep up to date with ongoing
developments and fulfil reporting requirements.
» Other regulatory matters are considered by the Board and addressed
within the Company risk register, which is updated at least annually.
» The Group’s share register is reviewed in detail on a regular basis
throughout the year to ensure that no shareholder group exceeds any
thresholds where the Group will have any adverse tax implications.
» No changes to accounting standards, tax law or accepted practice
have been identified as material to the Group’s performance and
results in the period.
» The Group continues to have tax losses that are potentially
available for offset against future profits of its subsidiaries.
Asat31 March 2022, tax losses amounted to €256.9 million.
» The Company implemented recommendations from its tax
advisers in relation to its corporate structure and operations
toensure it is correctly assessing and minimising its tax risks
andliabilities.
» The Company elected into the UK REIT regime effective 1 April 2022
relating to UK property income and capital gains only.
8 People
Principal risks Potential impact
» As the Company is internally managed it is reliant on the
performance and retention of key personnel.
» The departure of key individuals without adequate replacement may
have a material adverse effect on the Company’s business
prospects and results of operations.
» The inability to recruit suitable staff to support expansion or replace
leaving employees may have an impact on the implementation of
the Group’s growth plans.
» The inability to train suitable staff to support their personal and the
Company’s development.
» Reduced ability to implement the business strategy.
» Insufficient resources in place to support the Company’s
growthambitions.
» Extra cost and loss of knowledge and expertise from exiting
keypersonnel.
Mitigation Developments in the year
» The Company maintains an organisation structure with clear
responsibilities and reporting lines. Formal appraisals are performed
annually for performance, goal setting and development purposes.
» The remuneration structure for staff is designed to be competitive
and assist in attracting and retaining high-calibre staff that are
required to deliver the strategic objectives of the Company.
» The Group has introduced share-based incentives in order to give
employees a more long-term focus and commitment to the Company.
» Incentives align individual and departmental targets to Company
strategy and ensure that Executive Directors, the Senior
Management Team and staff operate in the best interests of
shareholders and are incentivised to remain in office.
» Continued commitment to the training and development of staff
through the Sirius Academy training programme and Company
leadership programme.
» Shareholdings in the Company are a very significant part of
theExecutive Directors’ and Senior Management Team’s
personalwealth.
» A share-based incentive plan for the Group’s top 50 employees,
launched in August 2019, has vested its shares in March 2022.
» The Group has 101 employee shareholders and plans to build
onthat through the issue of the share-based incentive plans.
» The Executive Directors and Senior Management Team in Germany
have an average term of service of ten years at the Company.
» The Group broadened its management team in the UK and
established a UK operating board responsible for executing
theGroup’s UK focused strategy.
Risk key
No change
Increased risk
Decreased risk
62
Sirius Real Estate Limited Annual Report and Accounts 2022
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
9 Systems and data
Principal risks Potential impact
» System interruption or breakdown.
» Data protection breach.
» Financial loss due to security breach or fraudulent activity.
» Cyber-attacks.
» Impeded access to core systems for internal and external customers.
» Loss of business-critical data.
» Penalties and potential litigation.
» Reputational damage.
Mitigation Developments in the year
» The Group has a detailed IT strategy, which is under continual
review and is focused on a balance between efficiency and control.
» A comprehensive disaster recovery plan is in place to ensure
minimal information and time are lost should an entire site go down.
» The Company employs a full-time data protection officer to plan and
control all data protection obligations as prescribed by applicable
laws and regulations.
» Of the three main systems used by the Company, two are hosted by
third party experts and one is hosted internally. All three systems
have service-level agreements in place for ongoing maintenance,
upgrades, back-up and improvements.
» Payment transactions are automated and subject to an internal
authority matrix, which is reviewed annually, to ensure appropriate
controls, including segregation of duty, are enforced at all times.
» Ongoing assessment and continuous monitoring of IT related risks.
» The Group was accredited with the Cyber Security Essentials
certification by the UK National Cyber Security Centre.
» Enhanced device management and control solution (“MDM”) and
security information and event management (“SIEM”) implemented.
» Optimised core infrastructure technologies for improved resilience.
» Continued development of security management.
10 Macroeconomic environment
Principal risks Potential impact
» Reductions in occupancy due to significant move-outs or insolvencies.
» Loss of income resulting in loan covenant breaches.
» Unexpected and sudden increases in inflation.
» Unexpected and sudden increases in interest rates.
» Significant business disruption leading to continuity challenges.
» Uncertainty in the market leads to downward pressure on
assetvalues.
» Uncertainty in the market leads to reduction in acquisitions or
disposal opportunities.
» Loss or delay in receipt of income resulting in reduced profits and
unexpected variability in cash flows.
» Reduction in profitability as a result of bearing cost increases that
are not offset by increases in revenues.
» Breach of loan facility covenants resulting in cash trap or
loanrepayment.
» Reduction in asset valuations leading to downward pressure
onNAV.
» Inability of the workforce to continue daily operations.
Mitigation Developments in the year
» The Group has a detailed business continuity plan that includes
provisioning for remote working.
» The Group has a diverse tenant base and no material dependencies
on specific industries.
» The Group has a wide range of products that are priced at different
points in order to meet the requirements of a variety of tenants.
» The Group’s pricing policy is to be below the upper quartile of the
market providing protection in challenging economic times.
» The Company controls costs charged to tenants through a
combination of providing metering, procuring at scale and utilising
forward purchasing agreements.
» The Group’s internal operating platforms include experienced cash
collection teams.
» Loan facilities incorporate covenant headroom, cure provisions
andsufficient flexibility to facilitate asset management initiatives
including asset substitution.
» The Senior Management Team has a track record, proven
methodology and experience through the last downturn.
» During the year the impact of the Covid-19 pandemic has
subsided as a result of vaccination roll outs.
» During the year the conflict in Ukraine has resulted in more
volatile market conditions.
» The Group successfully traded through the Covid-19 period,
posting a record result for two consecutive years.
» Like-for-like occupancy increased to 87.4% and 90.5% (excluding
Ipswich which is unoccupied) in Germany and the UK respectively.
» The Group maintained high cash collection rates throughout the
year ended 31 March 2022.
» As at 31 March 2022 the Group had cash balances amounting
to€151.0 million, of which €127.3 million is unrestricted cash.
Inaddition, the Group has €25.0 million undrawn credit facilities
available and a total of 127 unencumbered assets with a book
value of €1,584.0 million.
» The Group’s loan covenant position at 31 March 2022 supports
significant headroom across both LTV and income related
covenants and has undergone stress testing as part of regular
internal risk management activities.
Strategic report Governance Financial statements
63
Sirius Real Estate Limited Annual Report and Accounts 2022
11 ESG
Principal risks Potential impact
» As the legislative environment regarding climate evolves there are
transitional risks including changes in legislation and reporting
requirements.
» Ethics and governance.
» Diversity and inclusion.
» Changes in tenant demand driven shareholder and societal
expectations including the assets compliance to certain legislated
standards as well as physical location.
» The value of the Group’s assets could become impaired as a result of
failure to manage transition risks resulting in adverse financial impacts.
» The Group’s assets could be adversely impacted by climate change
physical risks resulting in financial loss and decline in value.
» Reduction in profitability as a result of occupancy decreases.
» Reduction in profitability and asset value due to costs associated
with ESG compliance.
» Reputational damage to the Company, reducing the talent pool.
» Reduced ability to implement the business strategy.
» Shareholders opting or being obliged to liquidate their holdings in
the Company.
» Insufficient resources in place to support the Company’s
growthambitions.
Mitigation Developments in the year
» The Group performed a high-level scenario analysis on a sample
ofassets in line with the TCFD recommendations in June 2021.
» The Group undertook an analysis of embodied carbon within its
supply chain to understand emissions reduction opportunities.
» The Group is progressing an analysis of a sample of its portfolio to
understand the implications of a transition to net zero emissions.
» Through its insurance provider, the Group undertook an initial
analysis of the physical risk exposure of the German portfolio
toclimate change under the current insurance cover.
» Oversight by the Sustainability and Ethics Committee and the
ESGCommittee in Sirius Facilities GmbH.
» Continued commitment to the training and development of staff
through the Sirius Academy training programme and Company
leadership programme.
» Including ESG in annual employee and tenant survey.
» The Group has carried out its GHG emissions calculations to
analyse its Scope 1, 2 and 3 emissions as they relate to its
German business and the details are provided in the Sustainability
section of this report.
» The Group is in the process of reviewing the GHG emissions in
relation to BizSpace.
» The Group has commenced a programme to integrate the ESG
activities of BizSpace with those of Sirius.
» The Group’s risk and control matrix has been updated to includeESG
related risks and mitigating controls. The risk andcontrol matrix forms
an integral part of the Group’s risk management framework and is
presented to and governed bytheAudit Committee.
» The Group has further developed its ESG strategy and
implementation programme.
» The Group has rolled out a biodiversity programme across
itsGerman business.
» The Group has commenced to incorporate ESG issues into
investment opportunity appraisals.
12 Foreign currency
Principal risks Potential impact
» Translation risk associated with holding assets in a foreign currency.
» Impact on LTV and other key performance indicators.
» Reduction in income recognised from foreign currency
denominated subsidiary as a result of GBP depreciation.
» Reduction in the reported values of the foreign currency
denominated subsidiary’s assets as a result of GBP depreciation.
» Reduction in reported asset values negatively impacting LTV and
other key performance indicators, leading to covenant breaches.
Mitigation Developments in the year
» Cash flows generated within the Group’s foreign currency
denominated subsidiary are used to fund the Group’s GBP
dividendpayments thereby limiting cross currency transactions.
» GBP to EUR represents an established and stable currency pairing.
» The Group can transfer cash resources freely between currencies
and is not restricted by any loan facility covenants.
» The value of Group’s EUR denominated assets far exceeds the value
of its GBP denominated assets.
» The value of Group’s EUR denominated assets far exceeds the value
of its EUR denominated debt.
» The Group recognises income from its foreign currency
subsidiary in accordance with IAS 21 using the average foreign
currency conversion rate.
» The Group consolidates its foreign currency denominated
subsidiary according to IAS 21 using the foreign currency rate
asat the reporting date.
» As at 31 March 2022 the Group’s GBP denominated assets
represented 22.2% of its total assets.
» As at 31 March 2022 the Group had a total of €1.6 billion of EUR
denominated assets and €995.6 million of EUR denominated debt.
» All loan facility covenants were met in full within the period.
Risk key
No change
Increased risk
Decreased risk
64
Sirius Real Estate Limited Annual Report and Accounts 2022
DISCLOSURES
Viability statement
In order to assess viability consideration has been given to the
potential impact on the business of the Group’s principal risks
and uncertainties as set out on pages 54 to 63 on the
assumptions made in the Group’s forecasts.
The Directors considered it prudent to assess viability using
what they consider to be a severe but plausible downside
scenario that includes consideration of a potential downturn in
the Group’s performance, including reductions in occupancy
levels and property values, as a result of macro-economic
factors, including the effects of the Russian invasion of Ukraine
and Covid-19. This scenario was incorporated into the Group
forecast in order to assess the impact of one or more such
scenarios eventuating.
Whilst all principal risks and uncertainties set out on pages 54
to63 could potentially impact the Group only those that are
considered to have high impact have been incorporated into
theviability forecast. Particular attention is given to the ongoing
implications of Covid-19 and the more recent impact of the
Russian invasion of Ukraine, existing and planned financial
commitments and financing arrangements including compliance
therewith as well as broader macroeconomic considerations.
The key assumptions modelled within the severe but plausible
scenario, linked to the corresponding principal risks and
uncertainties set out on pages 54 to 63 are detailed in the
tablebelow:
Scenario Principal risk and uncertainty
A reduction in rental income and increase
in net service charge costs following a
reduction in occupancy of 5% per annum
over a three year period.
» Organic growth
» Customer
The reduction is applied to the Group’s
starting rent roll and service charge costs
as at 31 March 2022.
» Macro-economic
environment
A reduction in investment property
valuesfollowing declines in occupancy
andmarket uncertainty of 5% per annum
over a three year period.
» Customer
» Valuation
» Market
» Macro-economic
environment
The Directors consider the likelihood of the severe scenarios
outlined above is significantly reduced due to a combination of
factors including the location of the Group’s assets within Germany
and the UK, the diversity of its tenant base, its multiple product
offerings and its management team’s experience of the global
financial crisis during which many of the Group’s asset
management strategies were developed.
Included in the viability assessment is the assumed refinancing
of €255.7 million of maturing debt during the three year period
on existing terms. Note 24 to the financial statements sets out
the maturity profile of the Group’s debt. The Directors believe
there is a reasonable prospect they will be able to refinance these
debt facilities as they fall due, a judgement which was informed
by the Group’s financial forecasts, the Group’s track-record
inpreviously refinancing maturing debt (including the recent
€300million corporate bond issuance in November 2021)
andthe period of time the Group has to arrange refinancing.
The Group assesses compliance with financial covenants to
ensure the conditions which would result in a breach of
covenant can be anticipated. Based on the severe but plausible
scenarios set outabove no covenant breaches are forecast.
Based on unrestricted cash at 31 March 2022 amounting to
€127.3 million, the Group’s expected ability to refinance the debt
maturing in the viability period, the forecast cash availability in
the scenarios and the exclusion of the benefit of any mitigating
actions, the Group considers itself to have sufficient cash
resources to remedy any breaches of its loan covenants in
thisscenario.
The scenarios detailed above are hypothetical and the financial
consequences considered severe for the purpose of creating
outcomes that have the ability to put the viability of the Group
atrisk. Multiple control measures are in place to prevent and
mitigate such occurrences from taking place.
Should such scenarios arise the Group has a variety of options
in order to maintain liquidity and continue in operation. Options
that could be considered in order to preserve or increase liquidity
include reducing any non- essential capital and operating
expenditure, suspending dividend payments, and arranging
finance against or selling unencumbered assets with a value
of€1.6 billion as at 31 March 2022.
Taking into account the Group’s current financial position and
principal risks and uncertainties the Directors confirm that they
have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due
overthe three years to 31 March 2025.
Governance
66 Corporate governance
68 Board of Directors
70 Senior Management Team
71 Corporate Governance
80 Audit Committee report
86 Nomination Committee report
89 Sustainability and Ethics Committee report
91 Directors’ Remuneration report
113 Statement of Directors’ responsibilities
114 Directors’ report
GOVERNANCE
Further depth, deeper skillsets
and greater experience
Dear Shareholder
Last year has been another very challenging one for the
Company with the continuation of the Covid-19 pandemic,
which led to government-imposed restrictions. At the time of
writing and subject to future Covid-19 mutations, the lifting of
restrictions was welcome news and the pandemic itself seems
to be receding. I have been impressed with the way in which
senior management and the wider Sirius team have performed
under this added pressure for the second year and how the
resilience of the Company’s business model led to favourable
outcomes for the year.
Environmental issues and climate change are increasingly
featuring in our Board discussions. The Sustainability and
EthicsCommittee continues to improve the Group’s economic
sustainability with Kremena Wissel, Chief Marketing and Impact
Officer (“CMIO”), leading the Group sustainability strategy.
Wehave engaged external specialists to assist us to broaden
our reporting and to prepare for TCFD disclosure for the first
time (further details are reported in the Sustainability report
onpages 36 to 47).
We have engaged with stakeholders throughout the year, from
tenants (continued assistance with pandemic requirements)
tosuppliers (embedding the Supplier Code of Conduct and
tackling modern slavery), communities (charitable giving)
andemployees (lead Director activities through forums
todiscuss pay and provide feedback on decisions taken
bytheBoard, based on annual employee survey results).
The Board’s Diversity Policy, which was adopted in 2017,
recognises the benefits of a diverse boardroom, and we have
continued to broaden boardroom diversity since then so that by
the end of the financial year, one-third of the Board was female.
Iwas delighted to welcome Joanne Kenrick to the Board in
September 2021 as an independent Non-Executive Director.
Joanne has received the initial stage ofher induction and I am
pleased that she has made valuable contributions to the Board
and Committees since herappointment. I was also delighted to
welcome Diarmuid Kelly to the Board as Chief Financial Officer on
1 February 2022 and this appointment, together with the change
of role by Alistair Marks to Chief Investment Officer, is described
in the Nomination Committee report set out on page 86.
As the Board has been substantially refreshed over the past few
years, we considered the term of office of James Peggie, who
reached a nine year term of office during the year. The Board
considers that James Peggie continues to remain independent,
as permitted by the Code, and plans for James to remain with
the Company for a further two years to enable a smooth
succession of his additional roles as Senior Independent
Director and of Chairman of the Remuneration Committee,
which will be transferred to Caroline Britton and Joanne Kenrick
respectively at the conclusion of this year’s AGM on 6 July 2022.
Director independence is considered further on page 78 of
thisreport.
My priorities for the coming year are to hold another Board
strategy discussion to build on that held in August 2021 and
tocomplete the induction of Joanne Kenrick who was appointed
in 2021.
The Annual General Meeting will be held at 10.00am (UK time)
on Wednesday 6 July 2022 at 33 St James’ Square, London
SW1Y 4JS. Idraw your attention to the Shareholder Circular
andNotice of Meeting (the “Notice of AGM”) which includes
adescription of the reasons to elect or re-elect the individual
Directors. The Notice of AGM accompanies this Annual Report
and Accounts, where you will find further details.
Daniel Kitchen
Chairman
10 June 2022
Daniel Kitchen
Chairman
CORPORATE GOVERNANCE
66
Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
Statement of compliance
Sirius is a property company incorporated in Guernsey
andlisted on the premium segment of the Main Market of
the London Stock Exchange (“LSE”) and the Main Board
ofthe Johannesburg Stock Exchange (“JSE”). It is a leading
operator of branded business parks providing conventional
space and flexible workspace in Germany and light industrial,
workshop, studio and out of town office units to a wide
range of businesses across the UK. Pursuant to a standing
dispensation issued in 2018 by the JSE, the Company is not
required to apply the King IV Code on Governance™ for
South Africa 2016, other than for mandated corporate
governance matters.
The Board considers that the Company has complied in all
material respects with the principles and provisions of the
UK Corporate Governance Code 2018 (the “2018 Code”)
throughout the financial year ended 31 March 2022, a copy
of which can be found at www.frc.org.uk.
Board composition

6
3
Non-Executive Directors
Executive Directors
0–3 years
4–7 years
7–9 years
The tenure for the three Executive
Directors is five years.
Note: As at 10 June 2022.
Board tenure
(Chairman and Non-Executive Directors)

3
1
5
Age
42 Average: 55 70
67
Sirius Real Estate Limited Annual Report and Accounts 2022
BOARD OF DIRECTORS
Broadening diversity and
experience in the Board
Daniel Kitchen
(1)
(70)
Chairman
Appointed to the Board
2018
Career and experience
Daniel Kitchen brings more than
27 years of property and finance
experience in both the listed and
private markets. After 14 years in
corporate finance and M&A with
the Investment Bank of Ireland, he
was appointed in 1994 as chief
finance officer of Green Property
Plc, an Irish listed property
company. In 2003 he left to join
Heron International as group
finance director and deputy chief
executive. Daniel was appointed
chairman of Irish Nationwide
Building Society between 2008
and 2011 and was a director of the
Irish Takeover Panel. He is currently
non-executive chairman of
Hibernia REIT Plc and holds no
further listed non-executive
directorship positions.
Andrew Coombs (57)
Chief Executive Officer
Appointed to the Board
2014
Career and experience
Andrew Coombs joined the Sirius
Facilities group in January 2010
from Regus Group Plc (now IWG
Plc) where he had been UK sales
director and became CEO ofSirius
Facilities in January 2012when
management was internalised.
Before Regus he was a director
and general manager for MWB
Business Exchange Plc. Andrew’s
responsibilities to Sirius Real
Estate include formulating and
delivering on the Group’s strategy
for creating shareholder value, as
well as how the business
manages its relationship with its
other stakeholders.
Alistair Marks (53)
Chief Investment Officer
Appointed to the Board
2014
Career and experience
Alistair Marks joined the Sirius
Facilities group in 2007 from MWB
Business Exchange Plc just before
Sirius’ original IPO and became CFO
of Sirius Facilities in January 2012
when management was
internalised. Prior to MWB Business
Exchange, Alistair held financial
roles with BBA Group Plc and Pfizer
Ltd and qualified as a Chartered
Accountant with BDO in Australia.
Alistair has been responsible for the
financial management of the Group,
its capital structure and all
investment activity and, prior to the
creation of the COO role, was
responsible for asset-level
operations. In his new role as CIO,
Alistair will focus on the Group’s
investment activity, covering
acquisitions, disposals and capex
investment programmes, utilising
his significant experience in the
industrial, office and business parks
sector, as well as deep operational
experience and expertise to identify
and execute on a wide range of
opportunities that unlock value
forthe Group.
Diarmuid Kelly (42)
Chief Financial Officer
Appointed to the Board
2022
Career and experience
Diarmuid Kelly joined the Sirius
Facilities group in 2015, and after
serving as Group Finance Director,
Diarmuid Kelly has been appointed
as CFO. Diarmuid has taken on
additional responsibilities relating to
the Group’s audit and financial
processes, as well as debt financing
and investor relations activities.
Diarmuid has over 18 years’
experience in financial
management within the
professional services, investment
management and sovereign wealth
fund sectors including as head
offinancial control and hospitality,
real estate at the Abu Dhabi
Investment Authority. Diarmuid has
a Master’s degree in International
Management from the University
ofExeter and is a Fellow Member
ofthe Association of Chartered
Certified Accountants (“FCCA”).
N
R S
(1) Designated Non-Executive
Director with responsibility for
engaging with the workforce.
68
Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
Kelly Cleveland (45)
Independent
Non-Executive Director
Appointed to the
Board
2020
Career and
experience
Kelly Cleveland is a
Chartered Accountant,
having qualified in New
Zealand in 2001 at
PricewaterhouseCoopers,
and has worked in real
estate in the UK since
2004. She is currently head
of investment for British
Land Co Plc, the FTSE 100
REIT, where she has
worked for more than nine
years, including roles in
strategy and corporate
finance. Kelly previously
held roles in corporate
finance andfinance
respectively at Grosvenor
Group and Burberry
Group Plc.
A
N
S
James Peggie (51)
Senior Independent
Director
Appointed to the
Board
2012
Career and
experience
James Peggie is a director
andgeneral counsel of the
Principle Capital group,
aprivateinvestment
business heco-founded
in2004. He is a qualified
solicitor and previously
was head of legal and
corporate affairs at the
Active Value group. Before
that he worked in the
corporate finance division
of lawfirm Sinclair Roche
&Temperley, prior to its
merger with Stephenson
Harwood. James has
25years’ experience in
corporate finance and
M&A, as well as wealth
management. He has
extensive experience as
adirector of his group’s
private investments, many
of which have been in the
real estate sector. He was
a non-executive director
ofLiberty Plc, owner of
theeponymous store in
London, from 2006 to
2010 and has previously
been responsible for the
operations of three listed
investment companies.
He holds no further
listed non-executive
directorship positions.
A
N
R
Joanne Kenrick (55)
Independent
Non-Executive Director
Appointed to the
Board
2021
Career and
experience
Joanne Kenrick brings over
30 years’ commercial
marketing experience and
has extensive listed, private
and charitable board
experience. Joanne’s
former roles include
marketing and digital
director for Homebase,
CEO of Start (HRH The
Prince of Wales’ initiative
for a sustainable future),
marketing and customer
proposition director for
B&Q and marketing
director at Camelot Group
plc. She was previously a
non-executive director of
Safestore Holdings plc and
of Principality Building
Society. Joanne has a
degree in law and started
her career at Mars
Confectionery and PepsiCo.
Joanne Kenrick is currently
a non-executive director
and remuneration
committee chair for both
Welsh Water and Coventry
Building Society, as well as
being deputy chair and the
senior independent
director for the latter, and
chair of the switching
services participant
committee and of PayM
for Pay.uk. She is also chair
of trustees of the charity
Make Some Noise.
N
R
S
Mark Cherry (63)
Independent
Non-Executive Director
Appointed to the
Board
2019
Career and
experience
Mark Cherry is a Chartered
Surveyor, having qualified
in 1983, and brings a
wealth of real estate
knowledge in the
investment and asset
management markets.
Mark was a main board
director of Green Property
Plc for ten years,
responsible for its UK
assets, and left on the sale
of the portfolio in 2003.
Subsequently he held a
board-level role at Teesland
Plc, a fund and asset
manager specialising in
small industrial estates with
offices throughout Europe,
including three in Germany.
In 2010 Mark joined Lloyds
Banking Group as the head
of asset management
within the real estate
“badbank”, where he was
responsible for setting
upanumber of initiatives
tooptimise recovery
proceeds from defaulted
loans. He is currently
employed on a part-time
basis by Invesco Asset
Management Ltd as its
adviser to the real estate
lending team. He holds no
further listed non-executive
directorship positions.
N
S
Caroline Britton (57)
Independent
Non-Executive Director
Appointed to the
Board
2020
Career and
experience
Caroline Britton is a
Chartered Accountant and
was an audit partner at
Deloitte LLP from April
2000 to May 2018, having
trained and qualified with
its predecessor firm Touche
Ross &Co. In addition to
providing audit and
advisory services to her
financial service sector
clients, Caroline ran the
FTSE 250 Deloitte NextGen
CFO programme. She is a
non-executive director of
Moneysupermarket.com
GroupPlc and Revolut
Limited. For both
companies she chairs the
audit committees and is a
member of the risk and
remuneration committees.
Caroline is a member of the
audit, finance risk and
investment committee at
Make-A-Wish International
anda Trustee of the Royal
Opera House.
N
A
Committee membership
A
Audit Committee
R
Remuneration Committee
N
Nomination Committee
S
Sustainability and Ethics Committee
Chairman of Committee
69
Sirius Real Estate Limited Annual Report and Accounts 2022
SENIOR MANAGEMENT TEAM
Strong leadership and
operatingexcellence
Andrew Coombs (57)
Chief Executive Officer
See page 68
Alistair Marks (53)
Chief Investment Officer
See page 68
Diarmuid Kelly (42)
Chief Financial Officer
See page 68
Rüdiger Swoboda (58)
Chief Operating Officer
Joined: 2010
Experience
Rüdiger holds an MBA Dual
Award from Anglia Ruskin
University and Berlin School
ofEconomics and a degree in
Business Economics from
Pforzheim University. Rüdiger
isManaging Director of Sirius
Facilities GmbH where he has
primary responsibility for new
lettings and tenant retention.
Priorto joining Sirius he was
director of sales & marketing
forMice AG, a conferencing,
meeting room and congress
business, and has a wealth of
experience in leading national
andinternational sales teams.
Craig Hoskins (51)
Asset Management Director
Joined: 2006
Experience
Craig holds a degree in combined
sciences and has almost 20 years’
experience in the real estate
industry. Craig is the Asset
Management Director for Sirius
Facilities GmbH. Priorto Sirius
heheld various management
roles, including for Workspace
Group Plc and with Saturn
Facilities Ltd, a UK multi-let
industrial business, whose
ownerswere founding members
of Sirius Facilities GmbH.
Stuart Gale (44)
Information Technology Director
Joined: 2019
Experience
Stuart joined Sirius Facilities
GmbH in 2019 as Information
Technology Director, bringing
more than 20 years of IT
experience with extensive
knowledge of IT strategy in
high-growth organisations.
Priorto joining Sirius, he worked
in a number of global ITleadership
roles, in particular for companies
developing fuelcell and low
emissions technology for the
automotive industry. Stuart
valuestechnological innovation
andiswell versed in the benefits
this can bring to anybusiness.
Kremena Wissel (43)
Chief Marketing and
ImpactOfficer
Joined: 2006
Experience
Kremena holds a Master’s degree
in Marketing and Advertising from
the University of Arts Berlin and
an Executive MBA from CASS
Business School London. She
hasstudied in Germany, the
United Kingdom, China, Vietnam
and South Africa. Previously she
worked for Media ProSieben,
theleading media production
company, and now works as Chief
Marketing and Impact Officer at
Sirius Facilities GmbH, anew role
to lead further integration of ESG
into Sirius’ strategic development.
Kremena was awarded a lifetime
membership of Beta Gamma
Sigma, the international business
school society.
Tobias Schorstädt (40)
Acquisitions Director
Joined: 2012
Experience
Tobias holds a Bachelor’s Degree
in Real Estate Management
fromthe University of Economics
and Law Berlin. Previously he
worked for ten years in facilities
management for two leading
German FM suppliers,
Gegenbauer and Dussmann.
Within his time at Dussmann
heworked as an expatriate
formore than five years
establishing the UAE branches
inAbu Dhabi and Dubai.
AtSirius,Tobias is now leading
theAcquisitions department,
developing and realising the
ambitious growth plans of the
business in Germany.
Andreas Schlesinger (40)
Contracts, Utilities and
Environmental Services Director
Joined: 2010
Experience
Andreas graduated with a diploma
in Business Administration from
the Administration and Economy
Academy. Andreas joined and
later became head of Sirius’
Service Charge department
andone of the two procurists
ofCurris GmbH, Sirius Group’s
procurement company for facility
management services and
utilities. Since 2021 Andreas
hasofficially been part of the
Sirius operating board and, beside
the two departments, healso took
over the environmental part of
ESG where he works with
Kremena Wissel – the main focus
is on reducing Group emissions.
Committee
membership
AM
Asset Management
Committee
ESG
Environmental, Social and
Governance Committee
HR
Human Resources
Committee
TEC
Technology Committee
Chairman of Committee
ESG
AM
TEC
AM
AM
AM
ESG
TEC
AM
HR
AM
ESG
HR
AM
ESG
HR
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Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
CORPORATE GOVERNANCE
Leadership and purpose
How Sirius is governed
The Board Governance Document, which governs the Board’s conduct and arrangements, and the Terms of Reference for
eachBoard Committee are available on request from the Company Secretary and are published on the Company’s website
at www.sirius-real-estate.com.
Executive leadership Independent
Andrew Coombs
Chief Executive Officer
Strong career in business
leadership and sales in the
commercial property sector
Caroline Britton
Non-Executive Director
Chartered Accountant and a former
audit partner at Deloitte LLP
James Peggie
Senior Independent Director
Lawyer specialising in corporate
finance and public and private
equityinvestment
Mark Cherry
Non-Executive Director
Chartered Surveyor and commercial
manager specialising in European
real estate markets
Joanne Kenrick
Non-Executive Director
Significant commercial marketing
experience
Kelly Cleveland
Non-Executive Director
Chartered Accountant and head of
investment for the British Land
Company Plc
Diarmuid Kelly
Chief Financial Officer
Senior finance expertise
Alistair Marks
Chief Investment Officer
Mix of senior finance and
commercial property expertise
Daniel Kitchen
Non-Executive Chairman
Substantial background in commercial property,
business and boardleadership
Anthony Gallagher
Company Secretary
Audit Committee
» Ensures the integrity of financial statements
» Oversees the internal and external audit programmes
» Monitors the financial control and risk management systems, and compliance with laws,
regulations and ethical codes of practice
see page 80
Nomination Committee
» Monitors the balance of skills, knowledge, experience, independence and diversity of the Board
and its Committees
» Oversees succession planning
» Ensures procedures are in place for senior management development and succession
see page 86
Remuneration Committee
» Designs and determines the remuneration and associated benefits of the Executive Directors
andsenior management
» Reviews workforce remuneration and related policies for alignment with the Group’s values
andculture, and reflects this when setting executive remuneration
see page 91
Sustainability and Ethics Committee
» Advises the Board on the economic sustainability of the business and ethical matters relating
totheGroup
» Provides a leadership forum for non-executive directors to work with executive management
toshape policy, strategy and, where appropriate, targets to improve the Group’s economic,
sustainability and ethical performance
see page 89
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Sirius Real Estate Limited Annual Report and Accounts 2022
Information about how our purpose relates to our strategy can be found respectively on pages 22 and 23.
Our culture
We believe a strong culture is built by creating an open working environment where every colleague feels supported, cared for and
rewarded. This deepens collaboration and encourages innovation allowing us to build strong partnerships underpinned by trust
andreliability. Our culture runs through everything that we do. We maintain a committed, results-orientated philosophy with a
risk-adjusted approach, which ensures we are focused on delivering long-term financial and social value.
During the 2022 financial year the Company continued to review and develop the Group’s culture and its alignment with our
purpose and strategy. The focus was on the Group’s first and second-line managers who, together with the Senior Management
Team, have the biggest impact on the business culture.
Leadership structure
The Board is the primary decision-making body for the Group. The Directors are collectively responsible for the long-term success
ofthe Company. This is achieved by aligning the Group around a common purpose and agreed strategy, supported by a conducive
culture and values. Leadership is exercised from the Board within a framework of prudent and effective controls, through executive
management to the business using formal reporting and decision structures, and informal, collaborative relationships. Day-to-day
management of the Company is overseen by the Executive Directors, who carry out the strategy established by the Board, in
accordance with the policies and delegated authorities set by the Board.
Division of responsibilities
The Board considers that it maintains an appropriate combination of Executive Directors and independent Non-Executive Directors
to reduce the risk that any one individual or group dominates the Board’s decision making. The Board also maintains a clear division
of responsibilities between the leadership of the Board and the executive leadership of the business. The responsibilities of the
principal Board roles are described below.
Non-Executive Chairman
Daniel Kitchen
Responsible for leading the Board and the quality of its performance. Provides guidance to the Chief Executive
Officer when requested. Sets the Board’s programme of work. Ensures that the Directors understand the views
of shareholders and other stakeholders on relevant topics. Promotes a culture of openness and debate in
theboardroom and constructive relations between the executive and non-executive elements of the Board.
Ensures that the Board receives accurate, timely and clear information.
Chief Executive Officer
Andrew Coombs
Formulates and proposes strategy for the Board’s approval. Responsible for executing the strategy and the
day-to-day management of the Group. Shapes a business culture which is aligned with the delivery of the
strategy and the overall values set by the Board. Allocates resources and creates direction and momentum
todeliver success for the Group within the agreed risk framework set by the Board.
Chief Financial Officer
Diarmuid Kelly
Manages the day-to-day financial operations and reporting for the Group, and its risk framework. Works alongside
the Chief Executive Officer in delivering the Group’s strategy.
Chief Investment Officer
Alistair Marks
Manages the Group’s investment activity, covering acquisitions, disposals and capex investment programmes
and works alongside the Chief Executive Officer in delivering the Group’s strategy and operational performance
of the business.
Senior Independent
Director
James Peggie
In addition to the responsibilities of a Non-Executive Director outlined below, acts as a sounding board for the
Chairman and serves as a trusted intermediary for the other Directors. Available to discuss with shareholders
any concerns that cannot be resolved through the normal channels of communication with the Chairman or the
Executive Directors. Annually appraises the Chairman’s performance.
Other independent
Non-Executive Directors*
Caroline Britton
Mark Cherry
Kelly Cleveland
Joanne Kenrick
Exercise sound judgement, bringing objective perspectives and broad expertise to the Board’s debates and
decision making. Use extensive knowledge and experience to bring strategic guidance and specialist advice to
the Executive Directors as they develop the business and resolve problems, bringing constructive challenge.
Monitor the Executive Directors’ performance in the delivery of the agreed strategy within the risk management
framework set by the Board. Contribute specialist knowledge and skills to the work of the Board Committees.
Company Secretary
Anthony Gallagher
Advises and assists the Board and the Chairman on governance and compliance matters affecting the Board
and the Group. Supports the Board in the effective execution of its programme of work, including Board
evaluations and the induction and training of Directors. Supports and advises the business on governance and
compliance matters and provides a channel of independent assurance between the business and the Board.
* Joanne Kenrick joined the Board as an independent Non-Executive Director on 1 September 2021. On 1 November 2021, Joanne was appointed as
a member of the Nomination, Remuneration and Sustainability and Ethics Committees.
Our purpose
“ Empowering business, unlocking potential.”
Our purpose is to create and manage optimal workspaces
that empower small and medium-sized businesses to grow,
evolve and thrive. We seek to unlock the potential of our
people, our properties and the communities in which we
operate so that, together, we can create sustainable impact
and long-term financial and social value.
CORPORATE GOVERNANCE CONTINUED
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Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
How the Board operates
Led by the Chairman, the Board operates under a formal schedule of matters reserved for its decision and follows a programme of work
which allows it to monitor the delivery of strategy and the Group’s financial and non-financial performance. Outside this programme,
arrangements exist that alert the Board to material issues of a short-term nature, enabling it to respond quickly and effectively.
This structured but flexible approach is designed to enable the Board to give proper and timely attention to its responsibilities. To assist
in the effectiveness of its work, certain matters are delegated to Committees whose roles and duties are outlined in Terms of Reference
set by the Board. The Committee Chairs provide a summary of the Committee activities at each Board meeting, advising of any issues
and recommendations.
The six scheduled Board meetings in the financial year and several unscheduled meetings, often called at short notice, were very well
attended by all members of the Board. The Board had to postpone a scheduled Board visit to Germany due to Covid-19 restrictions but
hopes to be able to do so in FY23. The following table sets out the Directors’ attendance at scheduled Board and Committee meetings
during the 2022 financial year:
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Sustainability and
Ethics Committee
Total meetings
(1)
6 3 4 6 2
Daniel Kitchen
(Non-Executive Chairman)
6/6
4/4 4/4
Caroline Britton
(1)
(Non-Executive Director)
6/6
4/4 4/4 2/2 1/1
Mark Cherry
(Non-Executive Director)
6/6
2/2 4/4 2/2 3/3
Kelly Cleveland
(1)
(Non-Executive Director)
6/6
4/4 4/4 2/2 3/3
Joanne Kenrick
(2)
(Non-Executive Director)
4/4
1/1 2/2 2/2
James Peggie
(Senior Independent Director)
6/6
4/4 4/4 4/4 1/1
Andrew Coombs
(Chief Executive Officer)
6/6
3/3
Diarmuid Kelly
(Chief Financial Officer)
1/1
Alistair Marks
(Chief Investment Officer)
6/6
Chairman of Committee
Committee member
(1) On 1 November 2021 the Board updated its Committee composition to be more focused and efficient. The following changes were implemented:
Mark Cherry, independent Non-Executive Director, stepped down from the Audit Committee and the Remuneration Committee; Caroline Britton,
independent Non-Executive Director, stepped down from the Remuneration Committee and the Sustainability and Ethics Committee; Kelly
Cleveland, independent Non-Executive Director, stepped down from the Remuneration Committee; and James Peggie, Senior Independent
Non-Executive Director, stepped down from the Sustainability and Ethics Committee.
(2) Joanne Kenrick was appointed to the Board on 1 September 2021 and was appointed to the Nomination, Remuneration and Sustainability and
Ethics Committees on 1 November 2021.
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Sirius Real Estate Limited Annual Report and Accounts 2022
Key focus areas
During the financial year, the Board has focused on a broad range of topics. Excluding routine matters, the Board’s main formal and
informal focus areas are summarised below.
Area Subject Link to Group purpose and strategy Relevant Section 172 considerations*
Strategic Core portfolio:
» In Germany, a total of ten assets were
acquired or committed to acquisition
in the year of mixed-use lettable
space totalling almost 309,900 sqm
for €201.9 million
» Acquisition of BizSpace, a leading
provider of regional flexible workspace
in the UK for c.£245 million (enterprise
value of £380.0 million)
» Organic growth programme focusing
capital on the most accretive
opportunities
» Notarised the disposal of a property
inMagdeburg, Germany for
€13.75million
Titanium portfolio:
» Acquisition of a business park in
Augsburg for €79.9 million, resulting
in Titanium owning in excess of
€350.0 million of property at
31March 2022
Follows the Group’s stated drivers of
value creation (see page 17):
» Intensive assessment and execution
of acquisitions and disposals
» Opportunity to diversify
geographically at scale through the
single acquisition of an established
platform in the UK
» Recycling capital from non-core and
mature assets into assets with
value-add potential
» Executing detailed asset-level
business plans, focusing on service
charge recovery and space
optimisation
» Highly accretive capex investment
programmes
These strategic decisions were made with
the longer-term success of the Company
foremost in the Board’s thinking.
Considerations included advancing the
successful relationship with AXA IM Alts,
the suitability of provision to current and
potential tenants, and the efficient
deployment of our field colleagues who
serve the core and Titanium portfolios.
Emerging
risk
In the past two years we identified
Covid-19 as an emerging risk and
havenow transferred the risk arising
from a pandemic across to a general
business risk.
The Board considered as emerging risks
the developing geo-political situation,
with associated increased inflation,
higher energy costs and supply chain
issues. The Board will monitor these
risks throughout the year.
» There remains a risk of more virulent
strains of Covid-19 emerging in the
near future, so management retains
its plans so as to respond to
minimise any future disruptions
Follows the Group’s stated drivers of
value creation (see page 17):
» Improvement of service charge
recovery
» Highly accretive capex investment
programmes
» Strong bank and investment banking
relationships
A broad range of considerations were
addressed during the Executive Director
presentations and subsequent Board
discussion. These included colleague
support, workforce wellbeing (including
mental health), supplier relations and
dismissing any government support
throughout the pandemic.
The Board considers the impact that
inflationary pressures may have on both
its income streams and cost base
including the review of sensitised
financial projections.
The Company mitigates the risk of
increased service charge and capex
investment related costs through a range
of procurement techniques including
volume-based discounts, forward
purchasing agreements and the use of
preferred suppliers.
Business » Approved geographical diversification
into the UK
» Approved property acquisitions
anddisposals
» Considered asset management plans
» Review of site development potential
» Monitored movements in estate
valuations, yields and other key
business metrics, and the
underlyingdrivers
Follows the Group’s stated drivers of
value creation (see page 17):
» Intensive assessment and execution
of acquisitions and disposals
» Recycling capital from non-core and
mature assets into assets with
value-add potential
» Executing detailed asset-level business
plans, focusing on service charge
recovery and space optimisation
The Board considers strategic and
tactical decisions within the context of
the Group’s overall strategy and drivers
of current and future value creation.
Bymaintaining a clear focus on these
drivers, the Board supports the Group as
it builds a stronger investment case. This
contributes to the long-term success of
the Company which benefits investors
and a broader spectrum of stakeholders.
CORPORATE GOVERNANCE CONTINUED
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Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
Area Subject Link to Group purpose and strategy Relevant Section 172 considerations*
Financial » Issuance of corporate bonds for
€700million in 2021
» Capital raise via placing of €160 million
as part payment for BizSpace
» Decision to pay a dividend for the
2022financial year per normal policy
» Repayment of secured debt facilities
with proceeds from the corporate
bondissuances
» Implemented the capex threshold
requiring a Board decision to
€2.0million, but continuing to report
capex investment over €500,000
Follows the Group’s stated drivers
ofvalue creation (see page 17):
» Strong banking relationships
» Utilisation of “structural” vacancy
» Improvement of service charge
recovery
» Highly accretive capex
investment programmes
Capital efficiency and flexibility have a
direct effect on the Group’s current
andfuture success and improve its
management of risk. Issuing corporate
bonds decreased the overall borrowing
rate and further augmented the number
and value of unencumbered assets.
Thissignificant step has enabled the
Company to be confident in its ability to
navigate any financial crisis more flexibly,
as unencumbered assets can be applied
to cure any banking covenant issues in
the Group’s secured debt facilities
should the need arise.
Stakeholders » SID engagement with investors in
relation to AGM voting intentions
» Daniel Kitchen is the designated
Non-Executive Director with
responsibility for engaging with the
workforce and reported on his
engagement with colleagues
» Detailed review of
workforce remuneration
» Received a summary of the findings
of the annual employee survey and
the actions taken
» Received reports from investor
roadshows and ad hoc meetings with
investors and analysts
» Received market updates from the
Company’s UK brokers and South
African sponsor
» Builds and maintains the trust and
confidence of investors and
colleagues in the Board and Senior
Management Team. The health of
these relationships is critical to the
Group’s ongoing success.
By continually developing its
understanding of investors’ and
colleagues’ views on a range of issues,
the Board is able to make better
decisions with wider considerations
inmind.
The impact of Covid-19 on colleagues
and tenants in addition to investors was
taken into consideration by the Board at
each meeting throughout the financial
year 2022.
Sustainability » Considered climate change as an
emerging financial risk
» Review of the business’ environmental,
social and governance programmes in
Germany and the UK
» Received specific reports on
ESG considerations for each proposed
acquisition
» Appointed specialist consultants
to assist with preparations towards
reporting carbon emissions and
TCFDreporting
» Received update reports from the
CMIO in relation to progress on ESG
(see separate report on page 89)
» Builds and maintains the trust
andconfidence of investors and
colleagues in the Board and
SeniorManagement Team.
» Develops the Board’s
understanding of how, and the
extent to which, climate change
might impact the Company’s
business model in the medium
tolonger term.
» Recognises that climate change is
also a concern to tenants, which
provides an opportunity to engage
and collaborate with them.
While Sirius is at a relatively early stage
in the development of its response to
climate change risk and sustainability,
the Board recognises that it is a
primary concern to all its stakeholders,
including the local communities which
are directly and indirectly affected by
the Group’s operations.
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Sirius Real Estate Limited Annual Report and Accounts 2022
Area Subject Link to Group purpose and strategy Relevant Section 172 considerations*
Governance » Considered Hampton-Alexander
diversity targets and Parker ethnicity
targets for FTSE 250 companies
» Conducted an external
Board evaluation
» Appointed a new independent
Non-Executive Director and provided
initial induction programme
» Approved 2022 Modern Slavery
Statement and implemented
Anti-Bribery and Corruption Policy,
including gifts and hospitality
» Various post-Committee meeting
updates from Committee Chairs
» Reviewed Committees’ Terms
of Reference
» Builds and maintains the trust and
confidence of investors, colleagues,
tenants and local communities in
the Board and Senior Management
Team.
» Directly contributes to effective
decision making and stewardship.
The Board is committed to a process of
continual improvement, which is served
by addressing governance matters.
The Company believes that modern
slavery and bribery and corruption risks to
the Group are relatively low. Nonetheless,
the Board considers these and other
activities are central to the Company’s
sense of corporate citizenship.
* This element of the table has been prepared in compliance with Provision 5 of the 2018 Code. While Provision 5 requires issuers to describe in the
annual report how stakeholder interests and the matters set out in Section 172 of the Companies Act 2006 (the “UK Act”) have been considered in
Board discussions and decision making, the Company is not subject to the UK Act or related regulations. Further information relating to stakeholder
engagement and how such engagement has influenced the Company’s decisions and environmental considerations, the Group’s work in the
community and fostering consumer and supplier relationships can be found in the Stakeholder engagement section of this report on page 79, on
pages 89 and 90 of the Sustainability and Ethics Committee report, and on pages 96 and 102 of the Directors’ remuneration report. Section 172
sets out the UK’s law on directors’ duties, being: the duty to act in a way the director considers, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole, having regard (amongst other matters) to: (a) the likely consequences of any
decision in the long term, (b) the interests of the company’s employees, (c) the need to foster the company’s business relationships with suppliers,
customers and others, (d) the impact of the company’s operations on the community and the environment, (e) the desirability of the company
maintaining a reputation for high standards of business conduct, and (f) the need to act fairly between members of the company.
CORPORATE GOVERNANCE CONTINUED
Key focus areas continued
Gender-balanced workforce
Women
Men

51%
49%
Site visits
In May 2022, the Chairman, CEO and Non-Executive Directors
visited several sites around Manchester, which formed part of
the November 2021 acquisition of BizSpace. The visits enabled
the Non-Executive Directors to develop their understanding of
the UK business and provides context to the implementation of
the strategy. The opportunity was also taken to spend time with
site managers and later with local management during a post
visit dinner. Further visits are being planned for Germany during
the year.
Diversity – our journey so far
Boardroom diversity
The Board’s Diversity Policy Statement adopted in May 2017
recognises that boardroom diversity:
“ …maximises the opportunities
toachieve the Group’s business
goals through an informed
understanding of the diverse
environments in which we
operate…making good use of
differences in age, gender, race,
skills, industry experience and
other distinctions...”
The importance of taking measured steps towards broadening
boardroom diversity in all its forms has been important in the
Board’s thinking during Board appointments over recent years.
Since 2017, we have been progressively working towards
greater gender diversity in the boardroom. Following all the
Board changes in the year, 33% of the Board are female, which
meets the target for FTSE 250 companies set by the Hampton-
Alexander Review in 2017. Further information on the Board’s
succession planning is set out on page 88 of the Nomination
Committee report.
Workforce diversity
The Group’s commitment to promoting diversity and an
inclusive culture among the workforce is set out on page 45.
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Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
Time commitments and conflicts of interest
It is the Board’s policy for Directors to seek the Board’s approval
before accepting an additional external appointment. The
Chairman and two of the independent Non-Executive Directors
currently maintain external non-executive appointments with
listed companies. The Board has considered their commitments
and has taken the view that they do not materially affect their
ability to fulfil their roles for the Company effectively. This is
illustrated by the ongoing Covid-19 crisis during the financial
year, whereby every Director fully prepared for, and participated
in, the scheduled formal Board meetings as well as a number of
unscheduled Board calls.
The Board maintains arrangements to manage potential
conflicts of interest, which includes a requirement for Directors
to disclose any interest and to recuse themselves on any
discussion or decision in which they have a personal interest.
Other than for matters relating to remuneration, it was not
necessary for any Director to recuse him or herself during the
financial year.
Director induction and development
Following Joanne Kenrick’s appointment in September 2021,
Joanne has received the initial stage of a formal induction to
theCompany and thebusiness. This entailed:
» specific briefings from the Chairman, the Chief Executive
Officer, the Chair of the Remuneration Committee and the
CompanySecretary;
» a review of the Company’s strategy, corporate goals and
current challenges;
» a review of the Group’s structure;
» a review of key corporate documents, such as the Articles
ofIncorporation and Group policies and procedures;
» a review of recent Board and general meeting minutes; and
» specific training on the JSE Listings Requirements, and
professional update seminars on current topics.
As part of Joanne’s ongoing development, the new Non-Executive
Director visited various operating sites in the UK and further visits
are scheduled for Germany and Joanne has received presentations
from several members of the Senior Management Team.
All Directors are encouraged to continue their professional
development by attending external courses and seminars that
are relevant to their roles.
Topical materials are also circulated to the Board as a whole. This
has been especially important during the Covid-19 crisis, where
sharing information on issues and developing practice and
advice through circulars on key impact areas has been invaluable.
A summary of the knowledge and personal effectiveness training received since April 2021 is provided in the table below.
Subject matter Topic
Audit practice update » Governmental policies
JSE regulation » Audit impacts relevant to the real estate industry on property valuations and audit conduct
Remuneration practice updates » Financial reporting and regulatory implications
» Seminars and bulletins provided by the Company’s remuneration advisers
Real estate ESG management » Updates on regulator Covid-19 guidance
» Communicating with institutional investors
» Financing and banking covenants
» Managing business risk
Updates on regulatory and governance issues are periodically included in Board packs or circulated between meetings in the form
of bulletins.
77
Sirius Real Estate Limited Annual Report and Accounts 2022
CORPORATE GOVERNANCE CONTINUED
Board evaluation
The Board is committed to a process of continuous development for each Director, for the Board as whole and for each Committee.
A high-performing, collegiate boardroom culture is designed and crafted over time and the Board considers the annual evaluation to
be a key component in that process.
The Board reviewed progress against the actions agreed from the 2021 evaluation and noted that it had achieved good progress.
The Board held the rescheduled the Board strategy sessions in August 2021 to facilitate further strategic-level discussions.
Succession of the Remuneration Committee Chair, Senior Independent Director and C-Suite were progressed and are more fully
explained on pages 86 and 87. The Board had increased the links with the wider Senior Management Team, each of whom have
presented papers to the Board. Board relationships were fostered with a Board lunch in August 2021 and a Board dinner in May 2022.
A dinner was held for the Chairman and NEDs only in September 2021. The Chairman increased the meetings and calls with Board
members throughout the year, with nine meetings to discuss M&A activity and seven Board Committee meetings to progress bond
issuances and equity placing. These were supplemented by ad-hoc calls between Board members.
The Board undertook its first external evaluation in January 2022, having undertaken a streamlined appointment process involving
ashort-list of potential providers. The Board evaluation was carried out by Boardroom Dialogue, which has no other connection
withthe Company. Boardroom Dialogue interviewed each Board Director and the Company Secretary in December 2021 and
January 2022, reviewed Board and Committee meeting packs from the previous year and attended the 28 January 2022 round
ofBoard and Committee meetings. The outcomes of the 2022 evaluation are summarised below. These themes will be taken
forward in the coming year and we will report our progress in the 2023 Annual Report and Accounts.
Methodology One-to-one conversations Summary report Nomination Committee recommendations
» Board effectiveness
interviews held by external
facilitator with all Board
members and Company
Secretary to review the
following (aligned with
the Code):
– Board leadership and
Company purpose
– Division of responsibilities
– Composition, succession
and evaluation
– Committee effectiveness
» Review of the Board
Chairman by the Senior
Independent Director
» Review of the Senior
Independent Director by the
Board Chairman
» Reviews of the Executive
Directors and the
Non-Executive Directors and
record of outcome sent by the
Board Chairman
» Review of the
Committee Chairs by
the Board Chairman
» Hold enhanced Board
strategy session in Germany
and review
visit programme
» Monitor culture for
alignment with purpose and
values and CEO to develop
stakeholder map
» Build programme of
presentations by senior
management
» Tailor workforce
engagement to local culture,
incorporate workforce views
in Board discussions and
decision making and feed
back to workforce on impact
of their views on Board
decisions
» Continue to develop Board
packs and rolling programme
and include executive
summaries in Board papers
and clarify expectation of the
Board
» Review Director induction
process for possible
enhancements
» Foster the links between the
Board and the Senior
Management Team, including
management presentations
to the Board
» Discuss the development
of a skills matrix for
Board membership
» Develop Board relationships
and cohesion through
programme of Board visits,
lunches and dinners
Independence
The Nomination Committee undertook a review of the independence of each Non-Executive Director during the year in accordance
with the 2018 Code. Other than Daniel Kitchen, who was considered to be independent on his appointment as Non-Executive
Chairman in 2018, the Board is satisfied that the Non-Executive Directors continue to be independent in thought and judgement.
The Board considered the term of office of James Peggie, who completed his ninth year in office in November 2021, and agreed
that James continues to be independent in character and judgement, in light of his personal contribution to Board debates and his
regular challenge of the Executive Directors. The Board nevertheless agreed to implement a succession plan to ensure a smooth
transition of experience and expertise over the next two years such that Caroline Britton will be appointed Senior Independent
Director and Joanne Kenrick will be appointed Chair of the Remuneration Committee at the conclusion of the AGM in 2022.
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Strategic report Governance Financial statements
Risk and internal control
Information regarding the Group’s principal risks is provided
inthe Strategic report on pages 54 to 63. A description of
theGroup’s internal control framework and risk management
systems is provided in the Audit Committee report on page 84.
Company Secretary
All Directors have access to the advice and support of the
Company Secretary. The Board has satisfied itself as to the
competence, qualifications and experience of the Company
Secretary as required by the JSE Listings Requirements.
Re-election of Directors
While the Company’s Articles of Incorporation provide for
one-third of the Board to retire from office by rotation, each
Director who continues in office offers him or herself for
re-election voluntarily at the Company’s AGM every year.
Approach to greenhouse gas emissions
The Group’s planned approach to the management of
greenhouse gas emissions through its governance, processes
and internal control is summarised in the Sustainability report
on pages 37 to 39 and in the Sustainability and Ethics
Committee report on pages 89 and 90.
Engagement with our stakeholders
Sirius maintains an active investor relations programme covering
the UK, South Africa, continental Europe and North America.
During the year, Daniel Kitchen, Andrew Coombs, Alistair Marks,
Diarmuid Kelly, James Peggie and Caroline Britton had meetings
with key shareholders in the United Kingdom and South Africa
covering business performance, remuneration andgovernance
topics. The Company’s positive business performance during
recent financial years has continued to bewell received, which
is supported by the Company’s diligent and responsive
approach to investors’ needs and interests.
Engagement with colleagues
The Group has engaged with colleagues through a number of
channels during the year; details are set out on pages 46 and 96.
Engagement with the community
The Group has several initiatives with local communities which
are set out on page 46.
79
Sirius Real Estate Limited Annual Report and Accounts 2022
AUDIT COMMITTEE REPORT
Strong oversight
overcomplexity
Caroline Britton
Chair of the Audit Committee
Dear Shareholder
I am pleased to present the Audit Committee report (the
“Report”) for the financial year ended 31 March 2022.
The Committee’s role is to protect the interests of shareholders,
providing assurance on a sound control environment within the
Group, and ensuring the integrity of published financial
information and an effective audit process.
The Committee maintains a busy and wide-ranging agenda.
Inaddition to the usual work carried out by the Committee,
thecontinuation of the Covid-19 crisis as a significant risk
hascontinued in the Committee’s thinking during the year
endprocess. Towards the year end and following the conflict
inUkraine, the Committee reviewed the potential risks arising
and noted that these were currently considered minimal for
theGroup but would continue to be monitored closely.
The Financial Reporting Council (“FRC”) reviewed our 2021 Annual
Report and Accounts and requested further information about
the method used to recognise service charge income and
thenature and extent of variable consideration in relation to
service charge income. The Company’s response satisfactorily
addressed the questions raised and it has incorporated all other
recommendations into its 2022 Annual Report and Accounts.
The FRC’s review was based on the Group’s published Annual
Report and Accounts and does not benefit from a detailed
knowledge of the Group’s business or an understanding of the
underlying transactions the Group entered into. The scope of
the review performed by the FRC was to consider the Group’s
compliance with reporting requirements and is not intended to
provide assurance that the Annual Report and Accounts are
correct in all material respects. The FRC’s letters are written on
the basis that the FRC accepts no liability for reliance on them
by the Company or any third party.
As a result of the acquisition of BizSpace and the increasing
sizeand complexity of the Group, the Committee has asked
management to establish an internal audit function in the
second half of the new financial year. The internal audit function
will perform targeted assignments in order to ensure the
Groupbenefits from the optimum level of assurance and value.
TheCommittee will report progress against these procedures
inthe 2023 Annual Report and Accounts.
The Committee members’ ability to visit assets in Germany was
curtailed by pandemic related travel restrictions during the year
under review; however, the aim for the new financial year is to
restore the pre-pandemic programme of visits to Germany.
TheCommittee members visited a selection of BizSpace sites
inManchester in May 2022 and in doing so gained valuable
insights into the Group’s operations and management of risk.
Caroline Britton
Chair of the Audit Committee
The primary functions of the Audit Committee are to:
» ensure the integrity of the Company’s periodic financial
statements;
» keep under review and monitor the Company’s financial
control and risk management systems and its processes
for complying with laws, regulations and ethical codes of
practice; and
» oversee the Group’s internal and external audit
arrangements.
The Committee’s Terms of Reference are available at
www.sirius-real-estate.com.
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I would like to thank the members of the Committee for their
commitment and input to the work of the Committee during
thisparticularly busy financial year. I would also like to thank
themanagement team together with all the Sirius and BizSpace
colleagues who have contributed to our work. It is their
combined hard work and commitment that ensured high
standards and timely financial reporting were maintained,
notwithstanding the challenges that Covid-19 pandemic
restrictions made on them during the financial year.
The Committee will continue to focus on external and internal
audit planning, risk management and internal controls. It will
also continue to monitor the impacts of Covid-19 and the
Group’s response to future strains, particularly in the winter
months. We will also monitor developments in Ukraine for any
impacts on the Company’s business and hope for an early
cessation of hostilities.
Caroline Britton
Chair of the Audit Committee
10 June 2022
How the Committee operated
during the year
Membership and attendance
Meeting attendance
Caroline Britton (Chair) 4/4
Mark Cherry
(1)
2/2
Kelly Cleveland 4/4
James Peggie 4/4
(1) Mark Cherry stepped down as a member of the Committee
on1November 2021 following a reorganisation of
Committeememberships.
The Committee met four times in the year, and comprises three
members, all of whom are independent Non-Executive Directors.
The Board considers that Caroline Britton, who is a qualified
Chartered Accountant and was an audit partner at Deloitte LLP
from April 2000 to May 2018 and is a non-executive director of
Moneysupermarket.com Group Plc and Revolut Limited, at
bothof which she chairs the audit committees, possesses the
qualifications, together with the necessary recent and relevant
financial experience, to satisfy the requirement of the 2018 Code.
The qualifications and experience of the other current members
of the Committee are set out on pages 68 and 69 of this Report.
Roles and responsibilities
The Committee’s main role is to assist the Board in discharging
its responsibilities with regard to the financial reporting process,
the audit process and the system of internal controls of the
Company, and compliance with financial laws and regulations
by the Company.
The ultimate responsibility for reviewing and approving the
Annual Report and Half Year Report remains with the Board.
However, the Committee helps to ensure the accuracy and
integrity of these reports, in particular with regards to any
significant judgements contained within them, and to monitor
any formal announcements relating to the Company’s financial
performance. The Committee reviews and approves the auditors’
annual audit plan to ensure it is consistent with the agreed
scope of engagement and it takes responsibility for all aspects
of the auditors’ appointment, performance and independence.
The Committee gives due consideration to laws and regulations
and the provisions of the UK Corporate Governance Code along
with the JSE Listings Requirements and the FCA’s Listing Rules.
Accordingly, the Committee advises the Board on whether,
taken as a whole, the Company’s financial statements present
afair, balanced and understandable assessment as well as
provide shareholders with the necessary information to assess
the Group’s performance, business model and strategy.
Similarly, it is the Board which is ultimately responsible for the
Group’s internal control environment. The responsibility for
monitoring the Group’s risk management arrangements and
assessing the effectiveness of internal controls has been
delegated to the Committee. The Group’s risk management
process and system of internal controls are designed to manage
rather than eliminate risk and are described in more detail in the
Principal risks and uncertainties section of the Strategic report
on pages 54 to 63.
The Committee also reviews the Group’s current trading
performance and future cash flow forecasts in order to
considerand advise the Board on its going concern and
viabilitystatements.
The Committee has satisfied itself in terms of paragraph 3.84 (g)(i)
of the JSE Listings Requirement that the Group Chief Financial
Officer has appropriate expertise and experience and resources.
81
Sirius Real Estate Limited Annual Report and Accounts 2022
AUDIT COMMITTEE REPORT CONTINUED
Key focus areas
The Committee’s main focus areas during and related to the financial year are summarised below.
Area Subject
External audit » Assessed EY’s annual submission of eligibility to act as auditors for the purposes of paragraph 3.84(g)(iii) of
the JSE Listings Requirements through requesting the information detailed in part 22.15(h) of the JSE
Listings Requirements
» Discussed and challenged the key assumptions of a presentation from the Group’s valuer, Cushman &
Wakefield (“C&W”), on the portfolio valuation for the 2022 financial year
» Received and discussed EY’s final report on their audit for the 2022 financial year
» Reviewed the Directors’ representation letter to the auditors in relation to the audit for the 2022 financial
year and recommended it to the Board for approval
» Received and discussed EY’s audit strategy and planning report for the 2022 audit, including the scope,
areas of focus, materiality, team and programme
» Reviewed the audit firm’s public disciplinary and quality record, and its auditor transparency report
» Assessed the auditors’ performance, quality and independence and agreed to carry out an internal
performance and quality review post year end
» Received EY’s audit update report in relation to the 2022 audit, including issues relating to audit conduct,
revenue recognition and portfolio valuation
» Considered the accounting for the acquisition of BizSpace including goodwill
» Held private sessions with EY without management present
Annual Report and
Accounts 2022 and
announcement of results
» Reviewed the Board’s going concern and viability statement
» Carried out a “fair, balanced and understandable” assessment
» Reviewed the content, including the Audit Committee report, and recommended the Annual Report
andpreliminary announcement to the Board for approval
Half Year Report 2022 and
announcement of results
» Reviewed the CFO’s summary of the half year results
» Received and discussed EY’s report on their half year review
» Discussed and challenged the key assumptions of a presentation from the Group’s valuer, C&W, on the
portfolio valuation for the half year 2022
» Reviewed the content and recommended the Half Year Report and announcement to the Board for approval
Dividends » Considered management’s paper on dividends including cash flow statement
» Reviewed a solvency statement as required under Companies (Guernsey) Law, 2008 and considered the
dividend for the second half of the year ended 31 March 2021, recommending it to the Board for approval
» Reviewed a solvency statement and considered the dividend for the six months ended 30 September 2021,
recommending it to the Board for approval
Internal audit » Discussed progress on implementing changes arising from PwC’s review of the Group in relation to the
impact of legislative changes affecting the Group and ensuring that the Group continues to optimise its
corporate structure
» Discussed the establishment of an internal audit function and asked management to recommend an
external provider and an initial scope of work for FY23
Risk, controls and
regulation
» As part of wider Board calls, reviewed severe but plausible stress tests on the Group’s financial position and
prospects
» Received periodic risk and control reports, including the Group’s risk matrix and updates to risks and mitigations
» Received the Whistleblowing Incidents Report and noted roll-out of Whistleblowing Policy and procedures
to BizSpace
» Monitored and reviewed the Group’s responses to the JSE in relation to the JSE’s Proactive Monitoring Programme
» Noted actions taken in relation to data security and IT resilience
» Reviewed the Group’s Risk Management Policy and undertook a review of the effectiveness of the Group’s
internal controls
Policy » Applied the new Non-Audit Fee Policy following the Revised Ethical Standard 2019 published by the FRC
inDecember 2019 and updated the policy to facilitate work by the external auditors on corporate bond
issuances and the acquisition of BizSpace
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Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
Governance
» Considered the underlying reasons for proposed increases in audit fees
» Discussed progress towards REIT conversion relating to the Group’s UK operations, effective 1April2022
» Considered the JSE Responsibility Statement and process required
» Monitored progress to completion in relation to the accounting integration of BizSpace
» Reviewed FRC letter in relation to FY21 Annual Report and approved response
» Reviewed Committee Terms of Reference
» Received positive feedback relating to the Committee from the 2022 external Board evaluation
» Considered the forward work programme of the Committee
2018 UK Corporate Governance Code (the “2018 Code”), guidance and standards
The Committee considers that it has complied with the 2018 Code, met the standards set out in the FRC’s April 2016 Guidance on
Audit Committees and fulfilled the requirements of the FRC’s Revised Ethical Standard 2019.
Significant matters considered in relation to the financial statements
Significant matters considered Audit Committee response
Valuation of investment properties
The carrying value of owned investment
properties is material to the Group’s balance
sheet. The valuation, which is performed half
yearly by Cushman & Wakefield LLP (“C&W”),
isbased upon assumptions including future
rentalincome, anticipated maintenance costs
andan appropriate discount and exit cap rate.
There is a risk that the carrying value will differ
from its fair value.
The fair value of the Group’s owned investment properties is determined by an independent valuer.
The Committee considered the independent valuer’s report and met with the valuer to understand
the basis for the valuation, the scope of its work and the level of available transactional evidence to
support the carrying value of investment property and the appropriateness of supporting business
plans as well as the transactional evidence available on the German and UK markets.
EY reported to the Committee at the half year on their review and the year end in relation to the
audit on their results and findings of their assessment of C&W’s valuation judgements.
Having considered and challenged EY’s reporting, the Committee concluded that, based on the
degree of oversight and challenge applied to the valuation process, the valuations are conducted
appropriately and objectively.
The Committee considered the explanations of C&W and EY as to how the wider economic
environment impacted property valuations as at 31 March 2022 and the audit of the Company’s
reporting on them. Generally, there were no adjustments to yield assumptions, except in relation to
those properties affected by noticeable changes in lease situation as well as those affected by
market movements since the last valuation as at 30 September 2021. While Covid-19 uncertainty
continues, together with recent rises in inflation and in interest rates, the German real estate
market remains active.
Physical inspections of properties were not possible early on in the lockdown period although all
planned inspections were carried out while complying with the lockdown restrictions. For the
assets located in Germany and for the September 2021 valuation C&W have inspected 14 properties
and for March 2022 C&W have inspected 13 properties, equating to approximately 40% of properties.
The Committee noted the main driver of valuation growth in the year to 31March 2022 to be
related to growth in income rather than changes to yield in both the UK andGerman markets.
The Committee compared the C&W valuations with the results presented by EY on their audit of
the valuations, which included the input of an EY Chartered Surveyor, as part of the external audit
plan agreed by the Committee.
The Committee discussed the impact of the Covid-19 crisis, together with the potential impact of
inflationary pressures and rising interest on the Group’s property valuations, with EY and C&W
respectively. Having considered and challenged EY and C&W respectively, the Committee
concluded that the valuations as at 31 March 2022 are appropriate.
Revenue recognition, including the timing of
revenue recognition and the treatment of rents,
service charge income and lease incentives
Certain transactions require management to
make judgements as to whether and to what
extent it should recognise revenue and present it
within the financial statements. Market
expectations and profit-based targets may place
pressure on management to distort revenue
recognition, which in turn may result in an
overstatement of revenues.
The Committee considered the main areas of judgement applied by management in accounting
for revenue including the treatment of rent, service charge income and lease incentives in the
coreportfolio.
EY performed data analytics procedures over the whole population of leases in the Group’s
portfolio and over the whole population of journal entries posted to revenue during the year.
EYalso performed analytical review procedures and tested samples of transactions relating to
rental income, service charge and other components of revenue. The Committee considered
andchallenged EY’s work and reporting on revenue recognition.
Having considered and challenged EY’s reporting, the Committee concluded that, having
consulted EY and considered the main areas of judgement applied by management, revenue
isappropriately recognised and reported.
Accounting for the acquisition of BizSpace
(newfor 2022)
The Group acquired BizSpace in November 2021
and now operates in two geographical markets
which includes UK specific risks in relation to
initial and subsequent accounting for the
acquisition. The requirements are complex in
relation to measurement and presentation of
financial information related to the transaction
and related contractual arrangements.
The Committee considered the impact on accounting arising from the acquisition of BizSpace
andasked management to develop and manage the accounting integration process.
Management devised an integration project with five main workstreams, namely: initial recognition
and purchase price allocation (“PPA”); trial balance mapping; accounting policy gap assessment
and alignment; internal control assessment; and reporting. The work performed included reviewing
specialist memos for the valuations and purchase price allocation, reviewing the value in use
calculation for goodwill, as well as assessing and challenging Managements’ impairment of the
goodwill balance. Management worked with the external auditors and with the BizSpace finance
team to progress the project. Management reported progress tothe Committee at the end of
January and again in March 2022, which the Committee discussed and noted that no material
issues had been identified and the project was tracking to plan.
The above description of the significant matters should be read in conjunction with the Independent auditors’ report on pages 118
to 126 and the significant accounting policies disclosed in the notes to the financial statements.
83
Sirius Real Estate Limited Annual Report and Accounts 2022
AUDIT COMMITTEE REPORT CONTINUED
Auditor independence and the effectiveness
ofthe external audit process
EY was appointed as the Company’s auditors in September 2018
following a competitive audit tender process which included
BigFour audit firms and one second tier audit firm. The audit will
be put out to tender again no later than 2027. The Committee
recommends the reappointment of EY as auditors at the
Company’s Annual General Meeting on 29 July 2022. The lead
audit engagement partner is Dan Saunders, who was appointed
in September 2018.
The Committee met with the auditors four times during the year
(average three times a year) to discuss their remit. The opportunity
is also taken at each meeting to discuss any issues arising from
EY’s audit work without management present. The Committee
Chair meets with the audit partner outside of Committee meetings
at least twice a year and Committee members have no other
connections with the current auditors.
The Committee assessed EY’s performance, quality and
independence, which includes:
» reviewing the audit firm’s public disciplinary and quality
record, and its auditor transparency report;
» reviewing the renewal of EY’s accreditation as an audit firm
bythe Johannesburg Stock Exchange dated 9 September
2021; and
» carrying out an internal review of the auditors and audit
conduct for the 2022 financial year (post year end).
The 2021 internal review of the auditors drew feedback from
members of the Committee and the finance team on a range of
topics relating to the quality of the audit firm, the audit team and
the audit itself, and value for money. EY were scored highly by
the Committee and management in most areas.
The auditors’ fee for the statutory audit increased for the 2022
financial year to €1,361,000 (31 March 2021: €684,000). The
main reasons for the increase included the manner in which the
Company has grown both organically and acquisitively, higher
staff retention and salary costs, investment in new technology,
new or amended ISAs since tender, FRC updates and EY
allocating more time to the audit and meeting regulator
expectations than was originally estimated.
While the Committee continues to be disappointed to see
further increases in the audit fee, the recent external and
inflationary influences, and increased demands and
expectations on external audits are recognised. While taking
every opportunity to promote efficiencies within the audit
process, the overriding objective of the Committee is to ensure
that a rigorous and quality audit has been delivered.
Following the Committee’s review, it is satisfied that the auditors
remain independent and are suitable for reappointment
considering, inter alia, the information stated in paragraph
22.15(h) of the JSE Listings Requirements (which relates to
theprovision of regulatory decision letters to the Company
following an inspection by the regulator; no inspection of the
auditors by the regulator was carried out in FY22).
The Committee has ensured that appropriate financial reporting
procedures were established and that those procedures are
operating in line with paragraph 3.84(g)(ii) of the JSE Listings
Requirements (which relates to the operation of appropriate
financial reporting procedures).
Performance evaluation of the Committee
The Committee’s performance was considered as part of the
externally facilitated Board evaluation process, which is
described in the Corporate governance report on page 66.
TheBoard considers that the Committee continues to perform
well in its role supporting the Board.
Internal audit
The decision on whether or not to implement an internal
auditfunction is made by the Board and this is based on the
recommendation of the Committee which normally considers
annually a number of factors in making its assessment. These
include the growth and scale of the Company, the diversity and
complexity of the Company’s activities, the procedures and
systems in place, the number of employees and the risk that
issues may arise as well as the cost and benefit of implementing
such a function.
The Committee reviewed its position on the establishment of a
formal internal audit function as a result of the increasing size
and complexity of the Company, which now has operations in
two geographies. The Committee recommended management
to establish an internal audit function, on an outsourced basis
inorder to benefit from a wider range of skills and expertise
than would be provided by an internally managed function.
TheCommittee expects this new internal audit function to be
implemented in the second half of the new financial year and
itis expected to provide additional assurance on a number of
areas where the Group identifies value in having internal audit
procedures carried out.
Risk management and internal controls
The Committee considers in detail the Group’s risk management
processes in addition to reviewing internal control procedures,
the half and full year results and external audit plans. Regular
reviews of significant risks are undertaken at meetings of the
Committee and its observations are reported to the Board.
TheGroup’s system of internal control is designed to manage
and mitigate rather than eliminate the risk of failure to meet
business objectives and can only provide reasonable, but not
absolute, assurance against material financial misstatement or
loss and the following activities are undertaken to mitigate this
where possible:
» review the effectiveness of the Company’s financial reporting
and internal risk and control policies and procedures for the
identification, assessment and reporting of risks;
» monitor the integrity of the Company’s financial statements and
all formal announcements relating to its financial performance
and ensure they are fair, balanced and understandable;
» review significant financial reporting issues and judgements;
» make recommendations relating to the appointment,
reappointment and removal of the auditors;
» monitor the independence and effectiveness of the
auditors;and
» review the Company’s procedures for preventing and
detecting fraud and bribery.
Having reviewed the Group’s risk management arrangements
and assessed the effectiveness of the internal financial controls,
the Committee is satisfied with how the internal financial
controls are operating.
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Whistleblowing
The Whistleblowing Policy is available in both English and German
and is available to all employees and details the confidential
reporting mechanism in place to allow them to raise any such
concerns that may arise.
In line with the 2018 Code, the Board assumed responsibility
from the Committee for overseeing the operation and
effectiveness of the Whistleblowing Policy.
During the year, there were no whistleblowing cases raised
across the Group, although it was noted that a pre-acquisition
case had been satisfactorily investigated and closed by BizSpace.
The Committee noted the roll-out of Whistleblowing Policy and
procedures to BizSpace during the year.
The whistleblowing arrangements were updated in 2021 to
facilitate calls to be made to an independent German speaker
(the majority of employees are based in Germany – in 2022
callscan be made in English); calls to be investigated by an
independent third party; a wider remit of areas covered by the
EU Directive (e.g. data and privacy, environmental protection,
security of network and information systems); protected
persons now covers not only employees but also third parties
(e.g. service providers); the misconduct of any employee (not
just senior management) can now be reported; confirmation of
reports must be given within seven days of a report being made
and feedback must be provided on reports within three months.
Data security
The Committee noted that Sirius prioritises cyber security
andIT resilience with representation at Board level. There is a
comprehensive Information Security Management System
(”ISMS”) in place supported by Information Security Policies.
These policies are enforced by a set of security controls which
maps to the UK Government’s Cyber Essentials scheme and
complies with the UK Government’s National Cyber Security
Centre (“NCSC”) guidance and best practices.
The Committee considers that cyber security at Sirius
providesdata confidentiality and integrity with a resilient
cyberinfrastructure, which has not experienced an information
security breach in the past three years. The latest audit of the
Company’s information security system was carried out in
December 2021 by a CREST accredited company. Compliance
with both EU and UK versions of General Data Protection
Regulation (“GDPR”) is also constantly reviewed by management
to assure the Committee. During the year under review the
Group was accredited with the Cyber Security Essentials
certification by the UK National Cyber Security Centre.
Management, overseen by the Information Technology
Committee (“ITC”, comprising the CFO, COO, IT Director and
Head of Yield and Analytics), assesses the risks continuously
(atleast quarterly), works to mitigate current and emerging
threats and circulates special briefings on major events. Risk
andvulnerability management life cycles are integrated into
ourcyber practices. External supply chain risks are carefully
managed and mitigated and cyber awareness training is
carriedout for all Sirius employees including the Sirius Senior
Management Team and tested annually.
Going concern and viability statement testing
The Board’s going concern statement is provided on pages 115
and 116 of the Directors’ report, and the viability statement is
provided on page 64 of the Strategic report. The Group’s ability
to continue as a going concern and viability statement are
based on current trading and the latest three year forecasts
prepared by the Senior Management Team. A model has been
created for this which uses a combination of existing
contractual agreements and future assumptions of
performance of existing assets and expected acquisitions and
disposals for which the Group currently has the resources.
In order to test the robustness of the forecast, sensitivities have
been applied to key income and expense items including rental
income, service charge recovery and overhead costs.
In considering the Board’s going concern and viability statement,
the Committee reviewed detailed stress tests and sensitivity
analysis provided by management which modelled the effects
of severe but plausible and more realistic scenarios on the
Group’s financial position and prospects. The scenarios
addressed the key risks to the Group’s liquidity and covenant
compliance, and the available mitigations to reduce these risks
where necessary to an acceptable level should experience tend
towards the severe but plausible scenario.
The Committee has reviewed and agreed the assumptions used
by management in these forecasts and the disclosures.
Non-Audit Services (“NAS”) Policy
The Committee has updated its NAS Policy in 2022 for
application in the 2022 financial year as explained in the
following paragraph.
The revised NAS Policy is in accordance with the FRC Revised
Ethical Standard 2019 (“2019 ES”) and with applicable Guernsey
regulation as it applies to a Guernsey registered company.
The policy requires the Committee’s prior approval for all
non-audit work to be carried out by the auditors and limits all
such fees in any year (excluding specified services required by
law or regulation) to a maximum of 10% calculated by reference
to the average statutory audit fee for FY2022.
The total non-audit fees paid to the auditors during the year
ended 31 March 2022 were €299,000 (representing 22% of
thestatutory audit fee) (31 March 2021: €63,000) paid to EY.
Thefee for 2022 covered work related mainly to the June and
November 2021 corporate bond issuances, the Interim Report
and the provision of a reporting accountant report, for which
the auditors were judged to be best placed to provide the
services. The Committee continues to monitor the extent
ofthenon-audit related work undertaken by the auditors to
ensure auditor objectivity and independence are safeguarded.
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NOMINATION COMMITTEE REPORT
Continuing Board evolution
Dear Shareholder
On behalf of the Board, I am pleased to present the Nomination
Committee report for the year ended 31 March 2022.
This has been another busy year for the Committee with the
addition of Joanne Kenrick to the Board as a Non-Executive
Director on 1 September 2021, primarily to succeed James
Peggie as Chairman of the Remuneration Committee, which is
planned to take place at the conclusion of the Company’s AGM
on 6 July 2022. Joanne Kenrick has been appointed as a
member of the Nomination, Remuneration and Sustainability
and Ethics Committees on 1November 2021.
On the Executive side of the Board, the Committee oversaw the
changes in roles effective 1 February 2022, with Alistair Marks
taking up the newly created role of Chief Investment Officer
(“CIO”) ( having served as Chief Financial Officer prior to the
change), while Diarmuid Kelly joined the Company’s Board of
Directors as Chief Financial Officer (“CFO”).
In his new role as CIO, Alistair will focus on the Group’s
investment activity, covering acquisitions, disposals and capex
investment programmes, utilising his significant experience in
the industrial, office and business parks sector, as well as deep
operational experience and expertise to identify and execute on
a wide range of opportunities that unlock value for the Group.
Diarmuid Kelly joined the Group in 2015, and, after serving as
Group Finance Director, Diarmuid has been appointed as CFO.
Diarmuid Kelly has worked directly alongside Alistair Marks for
more than six years and, as the Group has grown, has taken on
additional responsibilities relating to the Group’s audit and
financial processes, as well as debt financing and investor
relations activities.
These two appointments, together with the creation of the role
of Chief Operations Officer (“COO”) and Chief Marketing and
Impact Officer (“CMIO”) in 2021, completed a restructuring
ofthe Senior Management Team to reflect the significant
expansion of the business in recent years, including the
Company’s entry into the UK market with the acquisition of
BizSpace in November 2021. The appointments also provide
astrong framework to enable Sirius to achieve its ambitions for
future growth and the continued development of its platform.
The Committee’s review of succession planning and the
leadership pipeline noted the initial secondment and
subsequent appointments of Tobias Schorstädt (Acquisitions
Director) and Andreas Schlesinger (Contracts, Utilities and
Environmental Services Director) to the Sirius Facilities
operating board. The Committee considered the BizSpace
senior management succession plan, and was pleased with
additional senior management appointments to bolster the
existing management team.
The primary functions of the Nomination Committee are to:
» monitor the balance of skills, knowledge,
experience,independence and diversity of the Board
andits Committees;
» oversee succession planning and the process for
nominating, selecting, appointing, developing and
evaluating Directors; and
» ensure that appropriate procedures are in place for
succession planning (including diversity considerations)
and development in relation to the senior management
of the Group.
The Committee’s Terms of Reference are available at
www.sirius-real-estate.com.
Daniel Kitchen
Chairman of the Nomination Committee
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Strategic report Governance Financial statements
The Committee will continue to review succession as the
Company grows in size and complexity to ensure the availability
of a pool of suitably qualified and talented managers to deliver
the Sirius medium and long-term strategy. We will keep
shareholders informed as decisions are made and will provide
an update in the next Annual Report.
The Board’s Diversity Policy, which was adopted in 2017,
recognises the benefits of a diverse boardroom, and we
havetaken measured steps towards broadening boardroom
diversity since then. Page 47 of this report addresses the
Board’s Diversity Policy, and the Corporate governance report
on page 66 describes our progress on boardroom diversity.
The operating business in Germany prides itself on its
diversityand inclusion record, where all forms of diversity
andinclusiveness are normalised within the business and
arefully integrated into its ways of working. As the designated
Non-Executive Director with responsibility for engaging with
theworkforce, I carried out six further site visits in 2021 and
held conversations with numerous colleagues. I was particularly
impressed by the attitudes to diversity and inclusion which run
through the business. I plan to visit more sites in 2022, in both
Germany and the UK, to engage with colleagues across a range
of topics and will provide summary feedback to the Board.
We carried out the first externally facilitated Board evaluation in
the year, which covered the Board and the Board Committees
and separate evaluations were carried out for each Director.
Theprocess and outcomes are described on page 78 of the
Corporate governance report. The key takeaway for this
Committee is to discuss the development of a skills matrix
forBoard membership.
We carried out a review of the composition of the Board
Committees as it was time to move away from each of the
independent Non-Executive Directors sitting on all the Committees
and the aim is to achieve more focus and increased efficiency.
Details of the membership of each of the Committees are set
out in the individual Committee reports.
Over the new financial year, the Committee’s priorities were
toinduct and integrate the new Non-Executive Director
successfully, and to continue to review the succession plans,
including those for the BizSpace Senior Management Team.
As James Peggie completed his ninth year as a Non-Executive
Director in November 2021, succession for his key roles of
Chairof the Remuneration Committee and Senior Independent
Director became a particular focus and, following discussions
with fellow Board members and with major investors, it was
agreed that Caroline Britton would succeed James Peggie as
Senior Independent Director with effect from the conclusion
ofthe AGM on 6 July 2022. As planned, Joanne Kenrick will
succeed James Peggie as Chair of the Remuneration Committee
with effect from the conclusion of the AGM on 6 July 2022.
The Corporate governance report describes how we engage
with our shareholders. As Chairman of the Nomination Committee,
Iwelcome dialogue with shareholders on all matters under the
Committee’s remit.
Daniel Kitchen
Chairman of the Nomination Committee
10 June 2022
How the Committee operated
during the year
Membership and attendance
Meeting attendance
Daniel Kitchen (Chairman) 4/4
Caroline Britton 4/4
Mark Cherry 4/4
Kelly Cleveland 4/4
Joanne Kenrick
(1)
2/2
James Peggie 4/4
(1) Joanne Kenrick was appointed to the Committee on 1 November 2021.
Key focus areas
The Committee’s main focus areas during the financial year are
summarised below.
Area Subject
Appointments » Appointed Joanne Kenrick as an independent
Non-Executive Director
» Recommended the appointment of Diarmuid
Kelly as Chief Financial Officer and the
appointment of Alistair Marks to a new role as
Chief Investment Officer
Policy » Implemented Procedure for New Appointments
Governance » Reviewed the Company’s progress on gender
and ethnic diversity in the boardroom
» Reviewed the Management Structure Plan
» Reviewed management succession plans
» Reviewed and changed the composition of
Board Committees
» Reviewed findings of 2022 external Board
evaluation and made recommendations in
relation to actions to be taken
» Reviewed Non-Executive Director independence
» Reviewed the Nomination Committee Terms
ofReference
» Reviewed the 2021 Nomination Committee report
Diversity Policy
The Board’s Diversity Policy was adopted in May 2017. The policy
recognises that boardroom diversity maximises the opportunities
to achieve the Group’s business goals and includes a commitment
to diversity and gender equality in the recruitment process.
Italso requires the Committee to discuss and agree annually
allmeasurable targets for achieving diversity on the Board.
Subject to diversity considerations, our policy operates on
equality principles. These are to employ the best candidates
available in every position regardless of sex, race (ethnic origin,
nationality and colour), age, religion or philosophical belief,
sexual orientation, marriage or civil partnership, pregnancy,
maternity, gender reassignment or disability.
The Board’s progress on diversity is summarised on page 76
ofthe Corporate governance report.
The operating company in Germany, Sirius Facilities, is a signatory
to the German Charter of Diversity. With a gender-balanced and
internationally diverse workforce, with 34% of our managers
and 51% of the total workforce being female, over time it is
expected that more women will be represented in the higher
leadership roles.
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Procedure for New Appointments
The Committee approved a Procedure for New Appointments during the year, the main provisions of which are summarised below.
Evaluation Evaluate the balance of skills, knowledge, experience and diversity of the Board against the challenges and opportunities
facing the Board and the Group
Description Describe the role and capabilities required for the appointment, including diversity considerations
Search Agree on the search methods to be used and selection process to be followed, and brief any external search consultants
Assessments Depending on the chosen selection process, conduct interviews, perform assessments and carry out background
checks as applicable
Factors Consider any potential conflicts of interest if a candidate is known to a Director, the candidate’s other commitments and
time availability
Selection Make the appointment
Induction Arrange a formal induction to equip the Director in their responsibilities and knowledge of the Group’s strategy, position,
prospects and regulatory environment
The Procedure supports boardroom diversity by considering and placing a value on the benefits of diversity at an early stage in the
process, in addition to the individual capabilities of each candidate.
The Committee usually appoints independent executive search consultants for senior appointments, which assist through advice
and facilitating the search process. This entails agreeing the candidate brief, which explains to candidates why the appointment is
being made and provides information on the Group’s aims and direction. A long-list of potential candidates is reviewed and reduced
to create a short-list for interview. During the assessment process, attributes taken into consideration include the candidate’s
capabilities and qualities, attitudes and values, balance and complementary fit, and the ability to bring constructive challenge.
Executive search consultants, Redgrave Partners, were used for the appointment of Joanne Kenrick as the new independent
Non-Executive Director and prioritised diversity as well as experience (in particular in relation to remuneration) to broaden the
Board’s composition. These search consultants have no other connection with the Company.
Succession planning
The Committee formally reviewed the succession plan for the Executive Directors and other members of the Senior Management
Team at the September 2021 Committee meeting. The Committee also considered succession for the key roles of Chair of the
Remuneration Committee and Senior Independent Director as James Peggie completed his ninth year as a Non-Executive Director
in November 2021. The Committee discussed the requirements for these challenging roles, being knowledge of Directors’
remuneration (framework and regulatory environment) and highlighted investor relations and diplomacy skills as well as commercial
property experience.
The Committee is cognisant of the current gender composition of the Senior Management Team. While comfort is taken from the
greater gender balance at middle management levels, the progression of the leadership pipeline was again a key focus for the
Committee during the formal review in 2021.
The Committee noted that there is one Director on the Board from an ethnic minority background. While this pre-dates the
recommendations of the Parker Review 2017 to have at least one ethnic minority Director by 2024, we are committed to instructing
search consultants to identify candidates from diverse backgrounds, including ethnicity, for all appointments so that we continue to
meet the recommendations as a minimum.
Board evaluation
A summary of the external evaluation carried out in the year, including its design, process and outcomes, and how it has influenced
the Board’s work programme, is provided on page 78 of the Corporate governance report.
NOMINATION COMMITTEE REPORT CONTINUED
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SUSTAINABILITY AND ETHICS COMMITTEE REPORT
Accelerating
progress
Dear Shareholder
On behalf of the Board, I am pleased to present the Sustainability
and Ethics Committee report for the year ended 31 March 2022.
The Sustainability and Ethics Committee fulfils the function
ofa social and ethics committee under the terms of the
JSEListings Requirements and it has fulfilled its mandate
asprescribed by corporate law and that there were no
instances of material non-compliance to disclose.
The Committee considers and makes recommendations
totheBoard in relation to the critical dimensions of how
theCompany does business, specifically its value system
surrounding environmental impact, ethical standards and
social responsibility. This Committee report should be read
inconjunction with the separate Sustainability report, set
outon pages 36 to 47.
As a major property owner, we recognise our responsibilities to
our stakeholders, being employees, business partners, tenants
and the wider communities in which we operate. With that as
background, we recognise the importance of sustainability to
our business and we have made this a key priority for 2022 by
embedding it further into our strategy and business model as
well as integrating it into BizSpace, UK.
This commitment to our responsibilities is underlined by my
leadership of this Committee assisted by Kremena Wissel,
Chief Marketing and Impact Officer, whose role is to lead
further integration of ESG into Sirius’ strategic development.
Kremena has presented ESG updates to the Committee, which
included details on our developing environmental strategy and
the recommendations of the Task Force on Climate-Related
Financial Disclosures (“TCFD”).
The Committee noted that 90% of employees provided high
positive feedback about the Company’s health and wellbeing
programme rolled out during the Covid-19 pandemic, under
which flexible work arrangements and mental health training
programmes were rolled out across the business. As the
virulence and impact of Covid-19 recedes, we are implementing
programmes to encourage employees back to the office in a
safe and responsible manner.
Our progress in the year included a major current workstream
to measure and deliver a significant improvement with regards
to the Company’s impact on the environment. Examples
include sourcing almost 100% of portfolio electricity energy
from green electricity sources. We are reviewing heating
systems and are developing a programme to replace the most
inefficient heating systems across our sites and rolling out
biodiversity initiatives (10,458 trees planted in reforestation
projects to add toexisting 9,000 trees on site, 1,000,000
beeskept).
The primary functions of the Sustainability and Ethics
Committee are to:
» advise the Board on the economic sustainability of the
business and ethical matters relating to the Group; and
» provide a leadership forum for Non-Executive
Directorsto work with executive management to
shapepolicy, strategy and, where appropriate, targets
toimprove the Group’s environmental, social and
governance (“ESG”) performance.
The Committee’s Terms of Reference are available at
www.sirius-real-estate.com.
“ As a major property owner, we
recognise our responsibilities to
ourstakeholders, being employees,
business partners, tenants and
thewider communities in which
weoperate.”
Andrew Coombs
Chairman of the Sustainability and Ethics Committee
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Sirius Real Estate Limited Annual Report and Accounts 2022
How the Committee operated during the year
Membership and attendance
Meeting attendance
Andrew Coombs (Chairman) 3/3
Caroline Britton
(1)
1/1
Mark Cherry 3/3
Kelly Cleveland 3/3
Joanne Kenrick
(1)
1/1
James Peggie
(1)
1/1
(1) As part of a reorganisation of Board Committees, Joanne Kenrick
joined, while Caroline Britton and James Peggie stepped down from
the Committee on 1 November 2021.
Key focus areas
The Committee’s main focus areas during the financial year are summarised below.
Area Subject
Purpose,
values and
competencies
framework
» Noted progress to embed purpose statement, values and competencies framework across the business,
includingBizSpace
Sustainability » Approved and monitored the implementation of the recommendations of the Task Force on Climate-related Financial
Disclosures (“TCFD”) including scenario planning aligned with the Paris Agreement
» Reviewed the progress towards a detailed model for carbon emissions reduction leading to net zero
» Group’s outline sustainability strategy, including a strategic framework and draft climate change statement. Reviewed
evolution of the ESG strategy and programme involving a specialist consultancy which remains ongoing in 2022.
Thisincludes the potential impact of ESG reporting requirements and a materiality assessment including investors
andwider stakeholders
Colleague
update
» Received an update from the CEO on employee engagement during 2021 financial year and planning for
2022financialyear
» Noted employee initiatives taken during pandemic to improve mental and physical health
» Member of Charter of Diversity, Germany, and of LGBTQ Great, UK
» Noted introduction of target driven ESG incentives for management and all employees
Ethical
policies
» Reviewed drafts of the Modern Slavery Statement 2022, Anti-Bribery and Corruption Statement and Procedures,
Anti-Discrimination and Diversity Policy, Health and Wellbeing Policy, Supplier Code of Conduct, Sustainability Policy
andupdated Whistleblowing Policy – each of which were approved by the Board for implementation across the Group
Governance » Noted feedback on the Committee’s performance from the 2021 Board evaluation
» Monitored integration of Sirius ESG policies and initiatives into BizSpace
SUSTAINABILITY AND ETHICS COMMITTEE REPORT CONTINUED
It is reassuring that our efforts have been recognised by MSCI,
which re-confirmed our business’ ESG rating as AA in October
2021, and GRESB awarded us a “B” rating for our public
disclosure in September 2021.
In 2021 we published the Sirius Scope 1, 2 and 3 greenhouse
gas emissions for the first time in the Annual Report and we
are continuing to work towards a carbon reduction strategy in
partnership with a specialist ESG consultancy.
As referenced above, we are also working to embed the TCFD
into our Company strategy and risk framework, so that climate
change considerations will be a key part of our risk management
and strategic planning processes.
We appreciate that we are progressing our journey and we
have some way to go. Having made a start, however, we fully
intend, as a matter of urgency, to see this journey through to a
sustainable future.
Andrew Coombs
Chairman of the Sustainability and Ethics Committee
10 June 2022
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DIRECTORS’ REMUNERATION REPORT
Remuneration supporting
sustainable shareholder
values
Dear Shareholder
I am pleased to present the Directors’ remuneration report for
the year ended 31 March 2022.
Our report explains the work of the Committee and how we
have implemented our Remuneration Policy, which was strongly
supported by shareholders at the 2021 AGM with over 89% of
the votes in favour of it.
Following my letter are the two principal sections of the report:
» the Directors’ Remuneration Policy (the “Remuneration
Policy”) – this sets out our forward-looking Remuneration
Policy for Directors; and
» the Annual report on remuneration – this provides details of
the amounts earned by the Directors in respect of the year
ended 31 March 2022.
Our Remuneration Policy is designed to support the creation of
long-term sustainable shareholder value and provide a clear,
consistent and cohesive approach to reward for a FTSE 250
company. The Committee believes that the Remuneration Policy
continues to support our strategy and, accordingly, remains
appropriate. We will continue to monitor the operation of the
Remuneration Policy with a current intention to undertake a fuller
review in advance of the 2024 AGM in line with the usual UK
timeline of reviewing the Remuneration Policy every three years.
However, in line with JSE Listings Requirements we will put the
Remuneration Policy to an advisory vote at the 2022 AGM.
This is my final Directors’ remuneration report as Chairman of
theRemuneration Committee as Joanne Kenrick takes on that
role with effect from the end of the 2022 AGM. It has been a
rewarding six years as Chair of the Committee during which
time the Company has grown significantly both in size and the
number of people working in the business. It has also been
atime of considerable change in corporate governance and
theapproach to remuneration at Board level and the wider
workforce which I hope we have embraced. I shall continue
tobe available to support Joanne as she takes up the reins.
Iamsure she will be excellent.
Remuneration in the context of our
businessperformance and outcomes
forourkey stakeholders
Our aim is always to consider the wider workforce, our
shareholders and other stakeholders by taking a fair and
balanced approach to remuneration.
This year was a transformative year for Sirius marked by
twokeyfirsts which saw the Company access the corporate
bond market, successfully raising €700 million through two
oversubscribed issuances, and making a major corporate
acquisition with the strategic purchase of BizSpace, providing
geographic diversification and an established operating
platform in the UK.
The primary functions of the Committee are to:
» design and determine the remuneration and associated
benefits of the Executive Directors of the Company and
the senior management of the Group; and
» review workforce remuneration and related policies for
their alignment with the Group’s values and culture, and
take these into account when setting the policy for
Executive Director and senior management remuneration.
The Committee’s Terms of Reference are available at
www.sirius-real-estate.com.
“ Our Remuneration Policy is designed
to support the creation of long-term
sustainable shareholder value and
provide aclear, consistent and
cohesive approach to reward. Our
aim is always to consider the wider
workforce, our shareholders and
other stakeholders by taking a fairand
balanced approach to remuneration.”
James Peggie
Chairman of the Remuneration Committee
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DIRECTORS’ REMUNERATION REPORT CONTINUED
Remuneration in the context of our
businessperformance and outcomes
forourkey stakeholders continued
As detailed in our Strategic report:
» Our German platform continues to deliver strong organic
growth driven by asset management and strong occupier
demand. Like-for-like annualised rent roll increased by 6.5%
representing the eighth consecutive year of like-for-like rent
roll growth in excess of 5%. In addition, we have acquired a
record number of assets during the year which will provide
the Company with over 118,000 sqm of vacant space in
which we shall be investing in order to fuel future growth.
» We were pleased to complete the acquisition of BizSpace in
November 2021 for a cash consideration of approximately
£245 (€286) million and an enterprise value of £380
(€448)million. As a leading provider of regional flexible
workspace across the UK, BizSpace has provided Sirius
withan opportunity to diversify geographically at scale
through the single acquisition of an established platform.
Thetransaction provides a number of organic growth
opportunities, overlaid with meaningful operational and
financialsynergies.
» We conducted an oversubscribed placing of new shares to
raise €160 million for the acquisition of BizSpace.
» Our inaugural bond issuances in June 2021 and November 2021,
coupled with the repayment of €340.2 million of existing debt,
of which €170.7 million related to secured debt in Germany
and the €169.5 million of acquired BizSpace secured debt,
have transformed the Company’s financing arrangements
and will positively support Sirius’ future growth ambitions.
» Over the past year, the Company made a number of strategic
appointments at Group level, concluding its planned
expansion and evolution of its Senior Management Team to
position the business for its next stage of growth. These
changes saw Alistair Marks appointed to the newly created
role of Chief Investment Officer and Diarmuid Kelly promoted
to the role of Chief Financial Officer, both of which follow the
promotions of Rüdiger Swoboda to Chief Operating Officer
and Kremena Wissel to Chief Marketing and Impact Officer in
the previous financial year. We will continue to focus on hiring
and retaining the best talent across its platforms to support
its growth journey and are already well advanced in
strengthening the existing BizSpace senior team to bring in
new skillsets that will help the Group achieve its goals.
» For progress relating to the workforce, our community and
other stakeholders, please read the Sustainability report set
out on pages 36 to 47.
Directorate changes
With effect from 1 February Alistair Marks took up the new Board
role of Chief Investment Officer and Diarmuid Kelly joined the
Board as Chief Financial Officer.
A summary of Diarmuid Kelly’s remuneration arrangements
following his appointment to the Board is set out below.
Service agreements Six months’ notice from the Company
or Diarmuid Kelly
Salary on appointment €250,000
Pension 9.7% of salary in line with rate available
for the wider workforce
Annual bonus Up to 125% of salary
LTIP Up to 200% of salary
In the Policy approved at the 2021 AGM we included reference
to the provisions in Andrew Coombs’ and Alistair Marks’ service
agreements that entitle them to payments for observing
post-termination restrictive covenants, noting that these were
legacy arrangements which would not be replicated on future
appointments. A similar provision was included in Diarmuid Kelly’s
service contract which pre-dates his appointment to the Board.
The Company considered revising this on his appointment but
received professional advice that it is required under German law
to enable the enforcement of the provisions in the service contract.
Executive Directors’ remuneration for the
2022financial year
Salary and pensions
As set out in the Directors’ remuneration report for the year
ended 31 March 2021, Andrew Coombs’ salary was increased
to £485,000 with effect from 1 April 2021. The increase took
into account the significantly increased role and corresponding
responsibilities of the CEO position within Sirius Real Estate,
having regard to the material change in the scale and
complexity of the business.
As we reported last year, Alistair Marks’ salary remained at
€364,828 as of 1 April 2021. We reported last year that we
intended to reduce his salary to €320,000 with effect from
1October 2021 having regard to the appointment of Diarmuid
Kelly as then Group Finance Director. However, due to the
BizSpace acquisition and related bond issuance and equity raising,
Alistair’s move to become Chief Investment Officer was delayed
until 1 February 2022, at which point the reduction in Alistair’s
salary took effect and Diarmuid Kelly was appointed atthat point
as Chief Financial Officer. Further information in relation to salaries
for the year ended 31 March 2022 is set out on page 103.
In light of the acquisition of BizSpace, and in the expectation of
further growth during the coming year, leading to increased
complexity of the Group and stretch of the Executive Directors
and senior management involved across both Germany and the
UK, we intend to review salaries during the year with a view to
any changes coming into place in the year ending 31 March 2024
(and which will be communicated in next year’s report). This may
result in increases ahead of the wider workforce to reflect the
increased time and complexity of the cross border responsibilities.
With effect from 1 April 2021, the pensions for Andrew Coombs
and Alistair Marks were reduced from 15% of salary to 9.7% of
salary as reported last year and, in line with the rate available to
the majority of the wider workforce, Diarmuid Kelly’s pension is
9.7% of salary with effect from his appointment.
Annual bonus outturn
The maximum bonus opportunity for the financial year was
equal to 125% of base salary for each Executive Director.
Alistair Marks’ bonus outturn is calculated by reference to his
salary as CFO for the ten month period from the start of the year
to 31 January and by reference to his reduced salary as CIO for
the final two months of the year. Diarmuid Kelly’s bonus outturn
is calculated in respect of the full year by reference to the lower
level of salary (€225,000) which applied prior to his appointment
to the Board, and does not take account of his salary increase
with effect from his appointment to the Board.
As a consequence of the Company’s strong financial
performance (as highlighted above) and excellent delivery
around strategic and personal targets, Andrew Coombs,
AlistairMarks and Diarmuid Kelly each earned 96.67% of their
maximum bonus opportunity, details of which are provided on
pages 104 to 107. An explanation of how these targets align
with the Group’s key performance indicators is provided on
pages 105 and 106.
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Strategic report Governance Financial statements
The Committee considers the level of pay-out is reflective of the
overall performance of the Group in the year as well as the
experience of our shareholders and employees.
For Andrew Coombs and Alistair Marks, 35% of the bonus
earned will be deferred into shares, 50% of which will be
released to the Executive Directors after one year and 50% after
two years, subject to their continued employment. This deferral
arrangement will apply to the bonus earned by Diarmuid Kelly in
respect of the period from his appointment to the Board. In
respect of the ten months prior to his appointment to the Board,
35% of his bonus will be deferred in cash, in line with the policy
applied to the C-Suite Directors.
LTIP awards with performance period ending
duringthe year
Awards granted on 14 June 2019 pursuant to the 2018 LTIP, in
the form of nil-cost options, with a four year performance period
from 1 April 2018 to 31 March 2022 vested on 13 May 2022 at
100% of maximum. The Committee considers the level of pay-out
is reflective of the outstanding overall performance of the Group
over the performance period as well as the experience of our
shareholders and employees. See page 107 for further details.
2022 LTIP awards
Awards pursuant to the 2021 LTIP were granted during the year
to the Executive Directors and other members of the Senior
Management Team. Details are provided on page 108.
Chairman and Non-Executive Director fees
From 1 April 2021, the basic fee for Non-Executive Directors was
increased by 1% to €65,549. No increases were made to the
supplementary fees for chairing the Audit or Remuneration
Committee or for holding the office of Senior Independent
Director. During the year, the Committee reviewed the Chairman’s
fee which has remained at €141,600 since 2018. It was agreed by
the Committee, with effect from 1 August 2021, that the
Chairman’s fee was to be increased to €224,200 in light of the
growth in the scale and complexity of the business and the fee
not having been increased since 2018.
Non-Executive Director fees are shown below (converted to
euros based on the exchange rate of 1.18).
Fees at
1 April 2021
Chairman fee €141,600
Non-Executive Director fee €65,549
Additional fee for Chair of the Audit Committee €11,800
Additional fee for Chair of the Remuneration Committee
€11,800
Additional fee for Senior Independent Director €11,800
Implementation of Remuneration Policy for the 2023 financial year
Information on how the Company intends to implement the Remuneration Policy for the year ending 31 March 2023 is set out below:
Element Application of the Remuneration Policy
Salary
With effect from 1 April 2022, Andrew Coombs’, Alistair Marks’ and Diarmuid Kelly’s salaries will be increased by
3.5% in line with the general workforce increases to £501,975, €331,200 and €258,750 respectively.
Pension Pension for Executive Directors are aligned with the rate available to the majority of the wider workforce (currently 9.7% of salary).
Annual bonus Following the BizSpace acquisition which has provided geographic diversification and an established operating platform in
the UK, Andrew Coombs’ role and responsibilities across the two geographies have subsequently increased, with Andrew
taking direct CEO responsibility for both Germany and the UK. Reflecting the increase in the scope of his role, the
Committee has decided to increase his maximum annual bonus opportunity from 125% to 150% of base salary, in line with
the Remuneration Policy approved at the 2021 AGM. The other Executive Directors’ maximum annual bonus opportunity
will remain at 125% of base salary.
The annual bonus will be subject to stretching performance conditions based on a combination of financial measures,
strategic and personal objectives and ESG targets. The Committee considers the performance targets and objectives to be
commercially sensitive. Details of the performance targets and objectives, and performance against them, will be disclosed
in the Directors’ remuneration report for the year ending 31 March 2023, unless they are considered to remain
commercially sensitive.
65% of the bonus earned will be paid in cash, with the remaining 35% deferred into shares (50% of which will be released
to the Executive Directors after one year and 50% after two years).
The proposed performance measures and weightings for the FY23 bonus are as follows:
(1) Adjusted FFO is defined for the purposes of the bonus objectives as being funds from operations (as defined in the Glossary)
adjusted for senior management bonus costs and accruals and excluding any acquisitions that may be made during the year to
31 March 2023. The adjusted FFO figure shall be further adjusted in such manner as is agreed with the Remuneration Committee
for any disposals completed in the year to 31 March 2022.
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DIRECTORS’ REMUNERATION REPORT CONTINUED
Element Application of the Remuneration Policy
LTIP award Awards are proposed to be granted at the level of 200% of salary for both Andrew Coombs and Diarmuid Kelly. Alistair
Marks will receive the same number of shares granted to Diarmuid Kelly. Vesting of the awards will be subject to stretching
performance measures and targets based on annualised TNR growth (two-thirds of maximum) and relative TSR (one-third
of maximum). The performance measures will be assessed over three years and a two year holding period will then apply
to any shares which vest.
The targets for the 2023 LTIP grant are as follows:
Annualised TNR
(1)
growth over the performance period Vesting percentage
<7.5% p.a. 0% of maximum
7.5% p.a. 25% of maximum
7.5% p.a.>–<10% p.a. Pro rata vesting between 25% and 62.5% of maximum
10% p.a. 62.5% of maximum
10% p.a.>–<13.5% p.a. Pro rata vesting between 62.5% and 100% of maximum
13.5% p.a. 100% of maximum
(1) Calculated as annualised growth in adjusted net asset value plus dividends paid. Adjusted net asset value means the net asset
value of the Company adjusted for the fair value of derivative hedging instruments, deferred tax and goodwill.
Taking into account the strong total returns over the last few years these are considered to be stretching targets.
Relative TSR against the peer group
(1)
over the performance period Vesting percentage
Below median 0% of maximum
Median 25% of maximum
Between median and upper quartile Pro rata vesting between 25% and 100% of maximum
Upper quartile 100% of maximum
(1) TSR peer group: Workspace Group Plc, SEGRO Plc, Big Yellow Group Plc, Safestore Holdings Plc, Custodian REIT Plc,
Warehouse REIT Plc, Regional REIT Ltd, Hamborner REIT AG, DIC Asset AG, Urban Logistics REIT Plc, Industrials REIT, CLS
Holdings Plc, Londonmetric Property Plc, and Shurgard Self Storage SA.
Chairman and
Non-Executive
Director fees
The Chairman and Non-Executive Director base fee will be increased by 3.5% to €232,047 and €67,850 respectively in line
with the general workforce increases.
Additional disclosures
Sirius is a Guernsey incorporated company. We voluntarily report on Directors’ remuneration in line with UK issuers where the
disclosures are relevant to understanding our business performance and executive rewards.
Committee evaluation and conclusion
The Committee’s performance was considered as part of the Board evaluation process, which is described in the Corporate
governance report on page 78. I am pleased to report that the Board considers that the Committee continues to perform well
initsrole supporting the Board.
We remain committed to a responsible approach to executive pay and believe the Remuneration Policy operated as intended during the
year. The decisions made as a Committee as regards remuneration earned in respect of the year ended 31 March 2022 demonstrate
our commitment to ensuring that Executive Directors’ reward is aligned with performance and the outcomes for all our stakeholders.
We hope that shareholders will continue to support the Remuneration Policy and the Annual report on remuneration at the AGM on
6 July 2022.
James Peggie
Chairman of the Remuneration Committee
10 June 2022
Implementation of Remuneration Policy for the 2023 financial year continued
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How the Committee operated during the year
Membership and attendance
Committee members as at 31 March 2022 Meeting attendance
James Peggie (Chairman) 4/4
Mark Cherry
(1)
2/2
Daniel Kitchen 4/4
Joanne Kenrick
(2)
2/2
Caroline Britton
(1)
2/2
Kelly Cleveland
(1)
2/2
(1) Stepped down from the Committee on 1 November 2021.
(2) Joanne Kenrick was appointed to the Committee on 1 November 2021.
Key focus areas
The Committee’s main focus areas during the financial year are summarised below.
Area Subject
Decisions relating to the
Executive Directors and
Chairman
» Taking into account our strong performance, approved salary increases effective from 1 April 2021
» Reviewed the Chairman’s fee and approved increase with effect from 1 August 2021
» Approved bonus outturns for FY21 and retention of 35% by deferral in shares through the Deferred
Bonus Plan
» Released the remaining 50% of FY19 Deferred Bonus Plan awards and the first 50% of FY20 Deferred
Bonus Plan awards
» Approved awards under 2021 LTIP and performance conditions
» Set financial objectives and targets for FY22 bonuses
Decisions relating to other
members of the Senior
Management Team
» Approved outturns for FY21 bonuses and the percentage of cash retention for one year
» Released retained bonuses from FY20
» Set financial objectives for FY22 bonuses
» Approved awards under 2021 LTIP and performance conditions
» Reviewed senior management remuneration and contracts at BizSpace following the acquisition and
assisted with remuneration and contracts for new hires
Decisions relating to
managers below Senior
Management Team
» Inclusion of new members of the Senior Managers’ Share Incentive Plan
» Reviewed senior management pay proposals for FY23
Remuneration Policy » Reviewed the Directors’ Remuneration Policy and considered it remains appropriate for the forthcoming
financial year
Governance » Reviewed 2021 Directors’ remuneration report
» Reviewed workforce pay across the Group
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Sirius Real Estate Limited Annual Report and Accounts 2022
Principle Commentary
Clarity: remuneration arrangements
should be transparent and promote
effective engagement with shareholders
and the workforce.
We operate simple variable pay arrangements, which are subject to clear performance
measures aligned with the Group’s strategy and the interests of all stakeholders.
Details of our remuneration arrangements are disclosed clearly and concisely.
Simplicity: remuneration structures
should avoid complexity and their
rationale and operation should be easy
tounderstand.
Risk: remuneration arrangements
should ensure reputational and other
risks from excessive rewards, and
behavioural risks that can arise from
target-based incentive plans, are
identified and mitigated.
Both the annual bonus and LTIP are subject to malus and clawback provisions. This allows the
Committee to have appropriate regard to risk considerations.
Annual bonus deferral is in place for all Executive Directors. Furthermore, the operation of
in-employment and post-employment shareholding guidelines further align the interests of our
Executive Directors to serve the long-term interests of the Company and shareholders, in
addition to the large shareholding of both Andrew Coombs and Alistair Marks, two of the
Executive Directors.
The Committee also has discretion to override formulaic outcomes, which may not accurately
reflect the underlying performance of the Group.
Predictability: the range of possible
values of rewards to individual Directors
and other limits or discretions should be
identified and explained at the time of
approving the policy.
Details of the range of possible values of rewards and other limits or discretions can be found
on page 99.
Proportionality: the link between
individual awards, the delivery of strategy
and the long-term performance of the
Company should be clear. Outcomes
should not reward poor performance.
We believe total remuneration should fairly reflect performance of the Executive Directors and
the Group as a whole, taking into account underlying performance and shareholder experience.
The Committee considers the approach to wider workforce pay and policies when determining
the Directors’ Remuneration Policy to ensure that it is appropriate in this context.
Alignment to culture: incentive schemes
should drive behaviours consistent with
Company purpose, values and strategy.
In determining the Remuneration Policy, the Committee was clear that this should drive the right
behaviours, reflect our values and support the Group purpose and strategy. The Committee will
review the remuneration framework regularly so that it continues to support our strategy.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Wider workforce remuneration
andemployeeengagement
Sirius seeks to be an employer of choice for all of its employees.
Compensation is therefore structured competitively within the
market and is regularly reviewed in order to attract and retain
talent. Although employees are not actively consulted on
Directors’ remuneration, as the Non-Executive Director designated
under the 2018 Code for employee engagement, the Chairman,
Daniel Kitchen, engages directly with employees on a range of
topics of interest to them, including pay. This year the Chairman
accompanied the CEO, Andrew Coombs, on a roadshow of six
different sites in Germany where there was attendance by 86%
of the workforce. Those who could not attend in person were
provided with a presentation. The roadshow addressed the
results of the annual employee survey, the focus on being
anemployer of choice as a result of modern infrastructure,
balanced and aligned approach to remuneration, diverse
andinternational culture, staff development and training.
TheGerman employees were reminded how the Board had
listened and responded to previous survey results by introducing
flexible working, an all employee bonus (which in future will
belinked to ESG measures) and the Board’s appreciation of
employee efforts by recognition of the increased workload
during the pandemic through the provision of two additional
paid holidays on Christmas and New Year’s Eve.
There were open Q&A sessions on these and other topics of
interest to colleagues and the CEO took away a number of
topics for consideration as a result of the engagements, such
asfocus on ESG and ESG bonus, employee wellbeing initiatives
such as the planned head office move in Berlin, the continuing
career development and training of employees and the
continuation of the IT systems and infrastructure improvement
programme. Progress on these topics as well as the roll out of
the annual employee survey to the UK employees will be
reported in the Annual Report 2023.
As described in the Sustainability report on page 44, the Group
engages with colleagues through a number of formal and
informal channels, including an annual employee survey, which
explores a range of engagement, welfare and satisfaction areas.
Additionally, Share Incentive Plans are used by the Company to
motivate, reward and retain key members of staff. In particular,
we have in place a Senior Managers’ Share Incentive Plan (“SIP”)
to create staff alignment with the Group and promote a sense of
ownership. 31% of Sirius’ staff are currently shareholders.
These percentages exclude BizSpace employees who only
joined the Group in November 2021 and have not yet had an
opportunity to participate in Sirius’ share plans.
2018 UK Corporate Governance Code
(the “2018 Code”)
The Board considers that the membership of the Committee is
compliant with the 2018 Code. No individual is involved in
determining their own remuneration.
The 2018 Code applied to the Company from the start of the
2020 financial year and we have reported compliance with the
2018 Code within our Corporate governance report on page 67.
In determining the new Remuneration Policy, the Committee took
into account the principles of clarity, simplicity, risk, predictability,
proportionality and alignment to culture, as set out in the Code.
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Strategic report Governance Financial statements
Directors’ Remuneration Policy
This part of the Directors’ remuneration report sets out Sirius Real Estate’s Directors’ Remuneration Policy which was approved by
shareholders at the 2021 AGM. The Remuneration Policy has been determined independently by the Remuneration Committee.
The Remuneration Policy was adopted at the AGM held on 30 July 2021 and will be reapproved on an advisory basis at the 2022
and 2023 AGMs in accordance with the requirements of the JSE Listings Requirements that the Remuneration Policy be put to a
non-binding advisory vote each year.
The Policy as set out below is, therefore, broadly the same as that approved at the 2021 AGM, but with minor changes to update
theillustrations of the application of the Remuneration Policy on pages 99 and 100 and date specific references. The Policy has also
been updated to reflect the provisions in Diarmuid Kelly’s service contract with regard to payments for observing post-termination
restrictivecovenants.
Executive Directors’ Remuneration Policy
The following table sets out the elements of our Executive Director remuneration and how each element operates, as well as the
maximum opportunity of each element and, where relevant, the approach to performance measures.
Fixed remuneration
Element, purpose and strategic link Operation Maximum opportunity and performance measures
Basic salary
To provide a competitive base
salary for the market in which the
Company and its subsidiaries (the
“Group”) operate to attract and
retain Executive Directors of a
suitable calibre.
Usually reviewed annually taking account of a
number of factors which may include, but are not
limited to:
» Group performance;
» role, experience and individual performance;
» competitive salary levels and market forces; and
» pay and conditions elsewhere in the Group.
Increases will normally be in line with the range of
salary increases awarded (in percentage terms) to
other Group employees. Increases above this level
may be awarded to take account of individual
circumstances, such as:
» promotion;
» change in scope or increase in responsibilities;
» an individual’s development or performance in role;
» a change in the size or complexity of the business; and
» significant market movement.
Benefits
To provide market appropriate
benefits as part of the total
remuneration package.
Executive Directors currently receive private
medical insurance, income insurance, death in
service benefits and a company car.
Other benefits may be provided based on
individual circumstances, for example relocation
or travel expenses.
Reimbursed expenses may include a gross-up to
reflect any tax or social security due in respect of
the reimbursement.
Whilst the Remuneration Committee has not set a
maximum level of benefits that Executive Directors
may receive, the value of benefits is set at a level
which the Remuneration Committee considers
appropriate, taking into account market practice
andindividual circumstances.
Retirement benefits
To provide an appropriate level of
retirement benefit (or cash
allowance equivalent).
Executive Directors are provided with a
contribution to a self-invested pension plan
oracash allowance instead of contributions
toapension plan (or a combination thereof).
From 1 April 2021, the maximum contribution level
isset at the level not exceeding the contribution
available to the majority of the wider workforce
(currently 9.7% of salary).
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Sirius Real Estate Limited Annual Report and Accounts 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED
Executive Directors’ Remuneration Policy continued
Variable remuneration
Element, purpose and strategic link Operation Maximum opportunity and performance measures
Annual bonus
Rewards performance against
targets which support the
strategic direction and financial
performance of the Group.
Deferral provides a retention
element and direct alignment
toshareholders’ interests.
Awards are based on performance (typically
measured over one financial year). Pay-out levels
are normally determined by the Remuneration
Committee after the year end.
The Remuneration Committee has discretion
toamend pay-outs if it considers that the
formulaic output does not reflect its assessment
of performance, is not appropriate in the
contextof circumstances that were unexpected
or unforeseen at the start of the relevant year,
oris not appropriate in the context of other
factors considered relevant by the
RemunerationCommittee.
A proportion (normally up to 65%) of any bonus
is paid in cash with the balance normally paid
inthe form of ordinary shares in the Company
half of which are usually deferred forone year
and half for two years. A greater proportion of the
bonus may be deferred withthe agreement of
the Executive Director.
Additional shares may be delivered in respect
ofdeferred bonus award shares to reflect
dividends over the deferral period. The number
of additional shares may be calculated assuming
the reinvestment of dividends on such basis as
the Remuneration Committee determines.
Recovery provisions apply as referred to below.
The annual bonus opportunity is up to a maximum of
150% of base salary.
For the year ending 31 March 2023, Andrew Coombs’
maximum award level will be 150% of salary, whereas
the maximum award for the other Executive Director
will continue to be capped at 125% of salary.
Targets are set annually and aligned with key
financial, strategic and/or individual personal targets
(including ESG targets) with the weightings between
these measures determined by the Remuneration
Committee each year considering the Group’s
priorities at the time.
At least 60% of the bonus will be based on one or
more financial measures. For the year ending
31March 2023, 70% of the bonus will be based on
financial measures.
For financial measures, no bonus is earned for
threshold performance, rising to a maximum of 50%
of the bonus for on-target performance and to 100%
of the maximum for the financial element for
maximum performance.
The performance measures chosen for the year
ending 31 March 2023 are described on page 93.
Vesting of the bonus in respect of strategic measures
or individual objectives will be between 0% and 100%
based on the Remuneration Committee’s assessment
of the extent to which the relevant metric or objective
has been met.
2021 LTIP
To provide a clear link between
the remuneration of the Executive
Directors and the creation of value
for shareholders by rewarding the
Executive Directors for the
achievement of longer-term
objectives aligned to
shareholders’ interests.
The Remuneration Committee may grant awards as
conditional shares or as nil (or nominal) cost options.
Awards will usually vest following the assessment of
the applicable performance measures, which will
usually be assessed over three years, but will not be
released (so that the participant is entitled to acquire
shares) until the end of a holding period of two years
beginning on the vesting date.
Alternatively, awards may be granted on the basis
that the participant is entitled to acquire shares
following the assessment of the applicable
performance conditions but that (other than as
regards sales to cover tax liabilities) the award is not
released (so that the participant is able to dispose of
those shares) until the end of the holding period.
The Remuneration Committee has discretion to
amend pay-outs if it considers that the formulaic
output does not reflect its assessment of
performance, is not appropriate in the context of
circumstances that were unexpected or unforeseen
at the date of grant, or is not appropriate in the
context of other factors considered relevant by the
Remuneration Committee.
Additional shares may be delivered in respect of LTIP
award shares to reflect dividends over the
performance period and, if relevant, holding period.
The number of additional shares may be calculated
assuming the reinvestment of dividends on such
basis as the Remuneration Committee determines.
Recovery provisions apply as referred to below.
For the year ending 31 March 2023 and any future
year, the maximum award level will be 200% of an
Executive Director’s salary.
For these purposes, the “market value” of a share will
be the closing share price on the day of announcement
by the Company of its results for the financial year
preceding the year in respect of which the award is
granted, unless the Remuneration Committee decides
to determine market value on some other basis.
Performance measures for LTIP awards will include
financial measures (which may include, but are not
limited to, total net asset value and total shareholder
return) and may include strategic measures (which
may include ESG measures). At least 60% of the
award will be subject to performance conditions
based on financial measures and at least one-third
will be based on a total shareholder return measure.
The performance measures chosen for the year
ending 31 March 2023 are described on page 94.
Subject to the Remuneration Committee’s discretion
to override formulaic outturns, awards will vest as to
25% for threshold performance, increasing to 100%
for maximum performance.
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Sirius Real Estate Limited Annual Report and Accounts 2022
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Information supporting the Remuneration
Policy table
Explanation of performance measures chosen
Performance measures for the annual bonus and LTIP are
selected to reflect the Group’s strategy. Performance targets
areset each year by the Remuneration Committee, taking into
account a number of different factors. Our current approach is
that the annual bonus is assessed against a mixture of financial,
strategic and personal objectives (including ESG targets),
ensuring that Executive Directors are rewarded by reference
notonly to the relevant year’s financial performance, but also
achievement against non-financial metrics which are aligned
with the forward-looking delivery of strategy; this may include
measures targeting improvement in ESG. We currently intend
that awards under the 2021 LTIP will be based on a mixture of
total NAV return (directly linked to our KPIs) and, as regards at
least one-third of each award, relative total shareholder return
(which measures our performance against peer companies).
The Remuneration Committee retains the discretion to adjust or
set different performance measures or targets where it considers
it appropriate to do so (for example, to reflect a change in strategy,
a material acquisition and/or a divestment of a Group business
or a change in prevailing market conditions and to assess
performance on a fair and consistent basis from year to year).
Recovery provisions
The annual bonus and LTIP are subject to recovery provisions
as set out below.
Malus provisions apply which enable the Remuneration
Committee to determine before the payment of an annual
bonus or the vesting of an LTIP award that the bonus
opportunity or LTIP award may be cancelled or reduced.
Clawback provisions apply which enable the Remuneration
Committee to determine for up to two years following the
payment of a cash bonus or the vesting of an LTIP award that
the amount of the bonus paid may be recovered (and any
deferred bonus award may be reduced or cancelled, or recovery
may be applied to it if it has been exercised) and the LTIP award
may be cancelled or reduced (if it has not been exercised) or
recovery may be applied to it (if it has been exercised).
The malus and clawback provisions may be applied in the event
of material misstatement of audited financial results, material
error in the information or assumptions on which the award or
bonus was granted or vests (including an error in assessing a
performance measure), material risk management failure,
serious reputational damage, material corporate failure, or
grossmisconduct on the part of the Executive Director.
Shareholding guidelines during employment
To align the interests of Executive Directors with those of
shareholders, the Remuneration Committee has adopted
shareholding guidelines in accordance with which Executive
Directors are expected to retain all shares acquired under the
deferred bonus, 2015 LTIP, 2018 LTIP and 2021 LTIP (in each
case after sales to cover tax) until such a time as they hold
shares with a value equal to 300% of salary.
Shares subject to the 2018 LTIP and 2021 LTIP awards which
have vested but have not been released (that is, which are in a
holding period), or which have been released but have not been
exercised, and shares subject to deferred bonus awards count
towards the guidelines on a net of assumed tax basis.
Shareholding guidelines after employment
The Remuneration Committee has adopted a post-employment
shareholding guideline. Shares are subject to this guideline only
if they are acquired from share plan awards. Shares purchased
by an Executive Director are not subject to this guideline.
An Executive Director must retain, for two years after cessation
of employment, such of their relevant shares as have a value
atcessation equal to 200% of salary (or if less all of their
relevantshares).
Illustrations of application of Remuneration Policy
The following charts provide an illustration, for each of the
Executive Directors, of the application of the Remuneration
Policy for the year ending 31 March 2023. The charts show the
split of remuneration between fixed pay (base salary, benefits
and employer pension contributions/salary supplement), annual
bonus and long-term incentive pay on the basis of minimum
remuneration, remuneration receivable for performance in line
with Sirius Real Estate’s expectations, maximum remuneration
and maximum remuneration assuming a 50% increase in the
share price for the purpose of the LTIP element.
Andrew Coombs
Chief Executive Officer
Minimum
performance
Performance in line
with expectations
Maximum
performance
Maximum
performance
(with50% share
priceincreases)
€1,706k
€669k
€2,742k
€3,335k
Annual bonus
LTIPFixed pay
100%
35%
26%
39%
43%
32%
25%
53%
27%
20%
Alistair Marks
Chief Financial Officer
Minimum
performance
Performance in line
with expectations
Maximum
performance
Maximum
performance
(with50% share
priceincreases)
€856k
€390k
€1,322k
€1,581k
Annual bonus
LTIPFixed pay
Diarmuid Kelly
Chief Financial Officer
Minimum
performance
Performance in line
with expectations
Maximum
performance
Maximum
performance
(with50% share
priceincreases)
€715k
€295k
€1,136k
€1,395k
Annual bonus
LTIPFixed pay
100%
36%
23%
41%
46%
28%
26%
56%
23%
21%
100%
30%
24%
46%
39%
31%
30%
49%
26%
25%
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Sirius Real Estate Limited Annual Report and Accounts 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED
Information supporting the Remuneration Policy table continued
Illustrations of application of Remuneration Policy continued
In illustrating the potential reward, the following assumptions have been made.
Fixed pay Annual bonus LTIP
Minimum performance
Base salary (being the latest known
salary asat 1 April 2022, converted
into € at an exchange rate of 1.18
where necessary).
Employer pension contributions at an
assumed rate of 9.7% based on the
latest known salary.
Benefits as disclosed in the single
figure table on page 103 for 2021/22
in the case of Andrew Coombs and
Alistair Marks. As noted on page 90,
the 2021/22 single figure values for
Diarmuid Kelly are for the period from
1 February only, and accordingly have
been annualised to give an indicative
full year value.
No bonus. No LTIP vesting.
Performance in line
withexpectations
Bonus equal to 75% of
salary for Andrew
Coombs and 62.5% of
salary for other Executive
Directors isearned (50%
ofmaximum).
LTIP award granted equal to 200% of
salary for both Andrew Coombs and
Diarmuid Kelly, with Alistair Marks
receiving the same value of LTIP as
Diarmuid Kelly. In each case, 50%
ofthe shares are assumed to vest.
Maximum performance
Bonus equal to 125% of
salary is earned
(maximum bonus
earned).
LTIP award granted equal to 200% of
salary for both Andrew Coombs and
Diarmuid Kelly, with Alistair Marks
receiving the same value of LTIP as
Diarmuid Kelly. In each case, 100%
ofthe shares are assumed to vest.
Maximum performance (plus an
assumed 50% increase in the
share price for the purposes of
the LTIP element)
LTIP award granted equal to 200% of
salary for both Andrew Coombs and
Diarmuid Kelly, with Alistair Marks
receiving the same value of LTIP as
Diarmuid Kelly. In each case, 100%
ofthe shares are assumed to vest.
Non-Executive Directors’ Remuneration Policy
The Remuneration Policy for the Chairman and Non-Executive Directors is to pay fees necessary to attract an individual of the calibre
required, taking into consideration the size and complexity of the business and the time commitment of the role, without paying more
than is necessary. Details are set out in the table below:
Approach to
setting fees
» The fees of the Chairman are determined by the Remuneration Committee, and the fees of the Non-Executive Directors are
determined by the Board following a recommendation from both the CEO and the Chairman.
» Fees are set taking into account the level of responsibility, relevant experience and specialist knowledge of each Non-
Executive Director and fees at companies of a similar size and complexity.
Basis of fees » Non-Executive Directors are paid a basic fee for membership of the Board with additional fees being paid for chairmanship
of Board Committees.
» Additional fees may also be paid for other Board responsibilities or roles or time commitment, such as for holding the position
of Senior Independent Director or designated Non-Executive Director with responsibility for engaging with the workforce.
» Fees are normally paid in cash.
Other » Non-Executive Directors may be eligible to receive reasonable reimbursements such as travel and other expenses.
Reimbursed expenses may include a gross-up to reflect any tax or social security due in respect of the reimbursement.
» Neither the Chairman nor any of the Non-Executive Directors are eligible to participate in any of the Group’s
incentivearrangements.
Approach to recruitment remuneration
When hiring a new Executive Director, the Remuneration
Committee will typically align the remuneration package with
the above Remuneration Policy.
When determining appropriate remuneration arrangements,
the Remuneration Committee may include other elements of
pay which it considers are appropriate. However, this discretion
is capped and is subject to the limits referred to below.
» Base salary will be set at a level appropriate to the role and
the experience of the Executive Director being appointed.
This may include agreement on future increases up to a
market rate, in line with increased experience and/or
responsibilities, subject to good performance, where it is
considered appropriate.
» Pension will only be provided in line with the above
Remuneration Policy.
» The Remuneration Committee will not offer non-performance
related incentive payments (for example a “guaranteed
sign-on bonus”).
» Other elements may be included in the following circumstances:
– an interim appointment being made to fill an Executive
Director role on a short-term basis;
– if exceptional circumstances require that the Chairman
oraNon-Executive Director takes on an executive function
on a short-term basis;
– if an Executive Director is recruited at a time in the year
when it would be inappropriate to provide a bonus or
long-term incentive award for that year as there would not
be sufficient time to assess performance. Subject to the
limit on variable remuneration set out below, the quantum
in respect of the months employed during the year may be
transferred to the subsequent year so that reward is
provided on a fair and appropriate basis; and
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Strategic report Governance Financial statements
– if the Director will be required to relocate in order to
takeupthe position, it is the Company’s policy to allow
reasonable relocation, travel and subsistence payments.
Any such payments will be at the discretion of the
Remuneration Committee.
» The Remuneration Committee may also alter the performance
measures, performance period, vesting period, holding period
and deferral period of the annual bonus or 2021 LTIP, subject
to the rules of the 2021 LTIP, if the Remuneration Committee
determines that the circumstances of the recruitment merit
such alteration. The rationale will be clearly explained in the
next Directors’ remuneration report.
» The maximum level of variable remuneration which may be
granted (excluding “buyout” awards as referred to below) is
350% of salary.
» The Remuneration Committee may offer a service contract
with a notice period (from both the Company and the
Director) of up to twelve months.
The Remuneration Committee may make payments or awards
in respect of hiring an employee to “buy out” remuneration
arrangements forfeited on leaving a previous employer. In doing
so, the Remuneration Committee will take account of relevant
factors including any performance conditions attached to the
forfeited arrangements and the time over which they would
have vested. The Remuneration Committee will generally seek
to structure “buyout” awards or payments on a comparable
basis to the remuneration arrangements forfeited. Any such
payments or awards are excluded from the maximum level of
variable remuneration referred to above. “Buyout” awards will
ordinarily be granted on the basis that they are subject to
forfeiture or “clawback” in the event of departure within twelve
months of joining Sirius Real Estate, although the Remuneration
Committee will retain discretion not to apply forfeiture or
clawback in appropriate circumstances.
Any share awards referred to in this section will be granted as
far as possible under Sirius Real Estate’s ordinary share plans.
Ifnecessary and subject to the limits referred to above,
recruitment awards may be granted outside of these plans.
Where a position is filled internally, any ongoing remuneration
obligations or outstanding variable pay elements shall be
allowed to continue in accordance with their terms.
Fees payable to a newly appointed Chairman or Non-Executive
Director will be in line with the policy in place at the time
ofappointment.
Service contracts
Each of the Executive Directors has a service contract with the
Group. Other than in the case of a newly appointed Executive
Director in respect of whom a notice period of up to twelve months
may be offered, the notice period for Executive Directors will not
exceed six months. All Non-Executive Directors have initial fixed
term agreements with the Group for no more than three years.
Details of the Directors’ service contracts are set out below:
Name Commencement Notice period
Daniel Kitchen 24 September 2018 3 months
Andrew Coombs 20 January 2012 6 months
Alistair Marks 20 January 2012 6 months
Diarmuid Kelly 1 February 2022 6 months
James Peggie 27 November 2012 3 months
Caroline Britton 1 June 2020 3 months
Kelly Cleveland 1 June 2020 3 months
Mark Cherry 14 June 2019 3 months
Joanne Kenrick 1 September 2021 3 months
Payments for loss of office
Payments for loss of office will be in line with the provisions of
the Executive Directors’ service contracts and the rules of the
share plans.
Payment in lieu of notice
The Company retains the right to terminate each Executive
Director’s service contract by making a payment in lieu of some
or all of the notice period. Any such payment would consist of
base salary but not benefits in respect of the unexpired notice
period. Post-termination restrictive covenants are in place for six
months after notice of termination has been given. Under their
service contracts, Andrew Coombs and Alistair Marks are
entitled to a payment of 100% of salary for observing these
restrictions and Diarmuid Kelly to a payment of up to 50% of his
contractual remuneration. The provisions for Andrew Coombs
and Alistair Marks reflect legacy arrangements in their service
contracts. The provision in Diarmuid Kelly’s service contract is
included having regard to the Company’s professional advice
that this is required to enable the enforcement of the provision
in the service contract.
Annual bonus
In the event of cessation of employment, any payment to an
Executive Director in respect of annual bonus will be at the
discretion of the Remuneration Committee and will be dependent
upon a number of factors including the circumstances of their
departure and their contribution to the business during the
bonus period in question. In “good leaver” circumstances
including cessation due to death, ill health, injury, disability or
any other reason at the discretion of the Committee a departing
Director would typically be eligible for payment of a bonus. Any
payment will typically be pro-rated to reflect the proportion of
the bonus year worked and subject to performance achieved.
Ordinarily, any bonus will be paid at the usual time (although the
Remuneration Committee retains discretion to pay the bonus
earlier in appropriate circumstances).
Any deferred amounts from bonus earned in previous years
willnormally be retained by the Executive Directors unless the
Executive Director resigns to join or set up a competitive business
or is summarily dismissed. Awards will ordinarily only vest at
theusual time (although the Remuneration Committee retains
discretion to vest awards early in appropriate circumstances).
2021 LTIP
Leaving before an award has vested
If an Executive Director ceases employment with the Group
before an award under the 2021 LTIP vests as a result of death,
ill health, injury, disability or any other reason at the discretion of
the Remuneration Committee, the award will usually continue
and vest following the end of the performance period to the
extent determined taking into account performance conditions
and, unless the Remuneration Committee determines
otherwise, the proportion of the performance period that has
elapsed at cessation. In other “leaver” circumstances, the award
will lapse. Where an award does not lapse, it will ordinarily be
released at the end of the originally envisaged holding period.
The Remuneration Committee retains discretion to vest and
release the award at cessation and to assess performance
conditions accordingly and would do so in the event of death.
The Remuneration Committee also has discretion to release
theaward at another time (such as following the end of the
performance period).
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Sirius Real Estate Limited Annual Report and Accounts 2022
2021 LTIP continued
Leaving during the holding period
If an Executive Director ceases employment for any reason after
an award under the 2021 LTIP has vested but during the holding
period, the award will ordinarily continue in accordance with the
rules of the LTIP and be released at the end of the holding period,
unless the Executive Director is dismissed for gross misconduct
in which case the award will lapse. The Remuneration Committee
retains discretion to release awards at cessation and would do
so in the event of death.
Other payments
In appropriate circumstances, payments may also be made in
respect of accrued holiday, outplacement, legal fees and other
benefits. The Remuneration Committee reserves the right to
make additional payments where such payments are made in
good faith in discharge of an existing legal obligation (or by way
of damages for breach of such an obligation) or by way of
settlement or compromise of any claim arising in connection
with the termination of a Director’s office or employment.
Where the Remuneration Committee retains discretion, it will
beused to provide flexibility in certain situations, taking into
account the particular circumstances of the Director’s
departureand performance.
Where a “buyout” or other award is made in connection with
recruitment, the leaver provisions would be determined at the
time of the award.
Corporate events
In the event of a change of control of the Company or other
relevant event:
» unvested awards under the 2021 LTIP will be released to the
extent determined by the Remuneration Committee taking
into account the relevant performance conditions and, unless
the Remuneration Committee determines otherwise, the
extent of vesting so determined shall be reduced to reflect the
proportion of the relevant performance period that has elapsed;
» awards under the LTIP which are in a holding period will be
released to the extent already vested by reference to the
performance conditions;
» deferred bonus awards will be released in full; and
» awards under the 2018 LTIP will be treated in accordance
with the rules of that plan.
In appropriate circumstances, share plan participants may
beinvited (or required) to exchange their awards over Sirius
Real Estate shares for equivalent awards over shares in the
acquiring company.
There is no entitlement to any compensation in the event of
Non-Executive Directors’ contracts not being renewed or being
terminated without notice in accordance with their terms.
Operation of share plans
The Remuneration Committee may operate the Company’s
share plans, as approved by shareholders where relevant, in
accordance with their terms, including exercising any discretions
available to them under the plans. Awards may be adjusted in
the event of a variation of share capital or other relevant event in
accordance with the rules of the relevant plan. Awards may be
settled, in whole or in part, in cash, although the Remuneration
Committee would only settle an Executive Director’s award in
cash in appropriate circumstances, such as where there is a
regulatory restriction on the delivery of shares or as regards the
tax liability arising in respect of the award.
Legacy arrangements
The Remuneration Committee retains discretion to make any
remuneration payment or payment for loss of office outside the
Remuneration Policy in this report and to exercise any discretion
available in relation to any such payment:
» where the terms of the payment were agreed before the
Remuneration Policy came into effect (including the
satisfaction of awards granted under the 2018 LTIP); and
» where the terms of the payment were agreed at a time when
the relevant individual was not a Director of the Company
and, in the opinion of the Remuneration Committee, the
payment was not in consideration of the individual becoming
a Director of the Company.
For these purposes, “payment” includes the satisfaction of
awards of variable remuneration and, in relation to an award
over shares, the terms of the payment are agreed at the time
the award is granted.
Consultation with shareholders
The Remuneration Committee believes that ongoing dialogue
with major shareholders in relation to Executive Director
remuneration is of key importance, and consulted with major
shareholders and investor agencies in advance of the finalisation
of the Remuneration Policy proposed to shareholders at the 2021
AGM having regard to feedback received. The Remuneration
Committee will consider shareholder feedback received on
remuneration matters including issues raised at the Annual
General Meeting as well as any additional comments received
during any other meeting with shareholders. The Remuneration
Committee will seek to engage directly with major shareholders
and their representative bodies should any material changes be
proposed to be made to the Remuneration Policy.
In the event that 25% or more of shareholders vote against
either the Remuneration Policy or the Annual report on
remuneration, the Company will, in its voting announcement,
pursuant to the JSE Listings Requirements, extend an invitation
to dissenting shareholders to engage with the Company,
through dialogue, requesting written submissions or otherwise,
in order to address shareholder concern, always with due
regard to meeting the Company’s stated business objectives
whilst being fair and responsible.
Statement of consideration of employment
conditions elsewhere in the Group
The Remuneration Committee considers the pay and
employment conditions of Group employees generally and
takes these into account when determining the remuneration
ofthe Executive Directors. The level of salary increases of
employees within the wider Group is considered when
settingbase salary for Executive Directors. The Remuneration
Committee is also kept informed of general decisions made
inrelation to employee pay and related issues.
External appointments
None of the Executive Directors currently has an external
appointment other than personal service companies. The
Directors recognise that external appointments can broaden an
individual’s skills and experience. If an Executive Director wishes
to take up an external appointment, they must first seek
approval from the Chairman.
DIRECTORS’ REMUNERATION REPORT CONTINUED
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Strategic report Governance Financial statements
Annual report on remuneration
Single figure table
The following table sets out total taxable remuneration for each Director in respect of the year ended 31 March 2022 (converted,
where relevant, to euros based on an exchange rate of 1.18 unless stated otherwise).
31 March 2022 Salary/fees Benefits
(3)
Pension
(4)
Bonus
(5)
LTIP
(6)
Total
Total
fixed pay
Total
variable pay
Executive Directors
Andrew Coombs €572,300 €19,393 €55,513 €691,553 €2,017,800 €3,356,559 €647,206 €2,709,353
Diarmuid Kelly
(1)
€41,667 €1,860 €4,042 €45,314 €14,012 €106,895 €47,569 €59,326
Alistair Marks €357,357 €26,978 €34,664 €431,821 €2,017,800 €2,868,620 €418,999 €2,449,621
Non-Executive
Directors
Daniel Kitchen €196,667 — — — — €196,667 €196,667 —
Joanne Kenrick
(2)
€38,237 — — — — €38,237 €38,237 —
Mark Cherry €65,549 — — — — €65,549 €65,549 —
James Peggie €89,149 — — — — €89,149 €89,149 —
Caroline Britton €77,349 — — — — €77,349 €77,349 —
Kelly Cleveland €65,549 — — — — €65,549 €65,549 —
(1) Diarmuid Kelly was appointed to the Board on 1 February 2022. The 2021/22 figures reflect his remuneration for the period from 1 February 2022.
(2) Joanne Kenrick was appointed to the Board on 1 September 2021.
(3) Using exchange rates at the end of the month in which the transaction occurred.
(4) Pension contribution was 9.7% of salary for each Executive Director.
(5) Includes the value of the bonus paid in cash and the value of the bonus deferred into shares, as described below.
(6) The LTIP figures relate to the 2019 LTIP granted in June 2019 which vested after a four year performance period and are calculated using a share
price of €1.34, being the share price at the date of vesting (13 May 2022), converted to euros based on an exchange rate of 1.18.
The following table sets out total taxable remuneration for each Director in respect of the year ended 31 March 2021 (converted,
where relevant, to euros based on an exchange rate of 1.17 unless stated otherwise).
31 March 2021 Salary/fees
(3)
Benefits
(2)
Pension
(4)
Bonus
(5)
LTIP
(6)
Total
Total
fixed pay
Total
variable pay
Executive Directors
Andrew Coombs €502,035 €11,667 €71,379 €502,035 €1,708,650 €2,795,766 €585,081 €2,210,685
Alistair Marks €364,828 €29,754 €54,723 €364,828 €1,708,650 €2,522,783 €449,305 €2,073,478
Non-Executive
Directors
Daniel Kitchen €140,400 — — — — €140,400 €140,400 —
Justin Atkinson
(1)
€25,350 — — — — €25,350 €25,350 —
Mark Cherry €64,350 — — — — €64,350 €64,350 —
Jill May
(1)
€21,450 — — — — €21,450 €21,450 —
James Peggie €87,750 — — — — €87,750 €87,750 —
Caroline Britton
(2)
€61,250 — — — — €61,250 €61,250 —
Kelly Cleveland
(2)
€53,625 — — — — €53,625 €53,625 —
(1) Justin Atkinson and Jill May stepped down from the Board on 31 July 2020.
(2) Caroline Britton and Kelly Cleveland were appointed to the Board on 1 June 2020 and their fees reflect their roles since their appointment.
(3) Using exchange rates at the end of the month in which the transaction occurred.
(4) Pension contribution was 15% of salary for each Executive Director.
(5) Includes the value of the bonus paid in cash and the value of the bonus deferred into shares, as described below.
(6) The LTIP figures relate to the 2018 LTIP granted in January 2019 which vested after a three year performance period and are calculated using
ashare price of €1.13, being the share price at the date of vesting (21 May 2021), converted to euros based on an exchange rate of 1.16.
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Sirius Real Estate Limited Annual Report and Accounts 2022
Additional disclosures in respect of the single figure table
Base salary
The salaries applicable at 1 April 2021 or, if later, date of appointment to the Board are shown below (converted to euros based on
an exchange rate of 1.18, where relevant).
Executive Director
Base salary at
1 April 2021,
or, if later, date
of appointment
(1)
Andrew Coombs €572,300
Diarmuid Kelly €250,000
Alistair Marks
(2)
€364,828
(1) Further information in relation to the salaries for the year ended 31 March 2022 is set out on page 92. Note, Andrew Coombs is paid in sterling.
(2) Following the appointment of Diarmuid Kelly as CFO, from 1 February 2022 Alistair Marks’ salary was reduced to €320,000 to reflect his new
position as Chief Investment Officer.
Non-Executive Director fees
From 1 April 2021, the basic fee for Non-Executive Directors was increased by 1% to €65,490. No increases were made to the
supplementary fees for chairing the Audit or Remuneration Committee or for holding the office of Senior Independent Director.
During the year, the Committee reviewed the Chairman’s fee which has remained at €141,600 since 2018. It was agreed by the
Committee, with effect from 1 August 2021, that the Chairman’s fee was to be increased to €224,200.
Non-Executive Director fees are shown below (converted to euros based on the exchange rate of 1.18).
Executive Director
Fees at
1 April 2021
Chairman fee €141,600
Non-Executive Director fee €65,490
Additional fee for Chair of the Audit Committee €11,800
Additional fee for Chair of the Remuneration Committee €11,800
Additional fee for Senior Independent Director €11,800
Taxable benefits
Taxable benefits for the Executive Directors include a company car, private medical insurance, income insurance and death-in-
service benefits.
Annual bonus
For the year ended 31 March 2022, each of Andrew Coombs, Alistair Marks and Diarmuid Kelly was awarded a bonus opportunity
equal to a maximum of 125% of base salary. As noted above, Alistair Marks’ bonus outturn was determined by reference to the
salary he earned for the year taking into account the reduction of that salary with effect from 1 February 2022, and Diarmuid Kelly’s
bonus outturn was determined by reference to the lower level of salary which applied prior to his appointment to the Board.
The following table sets out the bonus earned by the Executive Directors and how this reflects performance for the year. The annual
bonus is based 70% on adjusted funds from operations (“Adjusted FFO”), 10% on other strategic objectives, 10% on ESG objectives
and 10% on personal objectives.
Adjusted FFO is used by the Board as a primary measure of the performance of the business, as it best reflects the changes in
cashflow the Group is generating from its operations. It is the measure the Company uses to determine the level of dividend payable
to its shareholders and cash flow from operations is a key factor in improving the value of the Group’s properties, as valuers and
potential buyers normally use a discounted cash flow model in determining values and offer prices. Adjusted FFO is defined for
thepurposes of the bonus objectives as being recurring profit before tax, adjusted for depreciation, amortisation of financing
fees,senior management bonus costs and accruals and current tax receivable/incurred. In the calculation of Adjusted FFO for
thepurpose of the bonuses, the Committee has excluded acquisitions made during the year, to enable a like-for-like comparison
with the previous year. Further information on its relationship with the Company’s KPIs and its relevance as a short-term bonus
performance measure is provided in the KPI section on pages 26 and 27 (adjusted profit before tax and dividend per share) and
inthe Dividend section of the Financial review on page 53.
2022 Weighting (% of salary) Target range Actual performance Pay-out (% of salary)
Adjusted FFO 87.5% €57.95m–€64.66m €69.94 87.50%
ESG objectives 12.5% See below 100% 12.50%
Strategic objectives 12.5% See below 2 of 3 achieved 8.33%
Personal objectives 12.5% See below 100% 12.50%
Total 125.0% 120.83%
DIRECTORS’ REMUNERATION REPORT CONTINUED
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Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
ESG objectives, personal objectives and strategic objectives 2022 financial year – outturn
For the 2022 financial year, Andrew Coombs’ and Alistair Marks’ ESG, strategic and personal objectives are as follows:
Executive Director Objectives Actual performance Bonus earned (% of salary)
ESG objectives
Both Establish a roadmap to reduce emissions at
Sirius and its assets, including conducting a
tenant survey.
Roadmap established – started net zero project for
the assets with consulting group Evora. Conducted
project on Scope 3 emissions and set activities for
Scope 1 and 2 emissions. Tenant survey conducted
in June 2021.
12.5% of salary from
a maximum of 12.5%
of salary.
Andrew Coombs Make meaningful progress on the bee, tree
and wildflower initiatives.
500,000 bees kept (with another 500,000 in April
2022), over 10,000 trees planted in corporate forest
and over 25,000 sqm turned into wildflower
meadows.
Andrew Coombs Promote wellbeing and encourage
charitable activities.
Held multiple staff wellbeing, diversity and
charitable events in the year.
Both Introduce and conduct staff compliance
training to cover modern slavery, Supplier
Code of Conduct, sustainability, health
andwellbeing.
Delivered multiple governance training sessions
tocover data protection, anti-discrimination,
modern slavery, Cyber Essentials, internal policies
and governance.
Both Publish full TCFD disclosure for FY22. Included in the Annual Report 2022 on pages 40 to 43.
Alistair Marks Deliver on the e-charging infrastructure
plan for 50% of Sirius sites.
38 sites in Germany (of 67 owned) now equipped
with e-chargers.
Alistair Marks Install full energy smart metering on 6% of
Sirius sites by 31 March 2022.
Smart metering installed on 7 sites (of 67) so
10.4%achieved.
Strategic objectives
Both Grow the gross asset value of Titanium
portfolio to a minimum of €425 million by
31March 2022 (one-third); generate
cashthrough corporate bond issuances,
refinancings, disposals/asset recyclings
orequity raisings to facilitate continuity
ofacquisitions programme throughout
FY22 (one-third); and complete 80,000 sqm
refurbishment of lettable space pursuant to
the capex investment programme
(one-third).
The Titanium portfolio grew to €349.7 million
during the year but did not achieve the target.
Cash was generated through €700 million bond
issuance, and; placing of €160 million to fund the
acquisition of BizSpace; and 93,232 sqm
refurbishment of lettable space was completed.
8.33% of salary from
a maximum of 12.5%
of salary.
Personal objectives
Andrew Coombs
Employees
Deliver a comprehensive training
programme to employees (including senior
management) of over 500 days.
1,268 training days delivered. 12.5% of salary from
a maximum of 12.5%
of salary.
Alistair Marks
Employees
Mentor Diarmuid Kelly for role of Chief
Financial Officer and ensure a smooth
transition for the finance team.
Diarmuid Kelly appointed by the Board as CFO with
effect from 1 February 2022 after 6.25 years of
service reporting to Alistair. The finance function has
been fully engaged all year with no transition issues.
Andrew Coombs
Stakeholder engagement
Deliver a comprehensive investor and
analyst engagement programme, including
investor visits, site tours and conferences
where permitted.
Held 72 separate investor presentations in London,
the USA and SA and 9 separate presentations to
broker sales teams in London. Hosted 4 separate
investor tours of the UK and Germany (85
engagements in total).
Andrew Coombs Deliver an engaging programme for Board
meetings, including presentations by senior
staff and external advisers on current and
relevant topics, as well as Board visits and
site tours where permitted.
Attendance by external Board evaluation experts,
property valuers, corporate advisers, the CEO of
BizSpace, and members of the Senior Management
Team. Board visits were curtailed by ongoing
Covid-19 travel restrictions. Chairman attended six
CEO forum events.
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Sirius Real Estate Limited Annual Report and Accounts 2022
Executive Director Objectives Actual performance Bonus earned (% of salary)
Alistair Marks
Stakeholder engagement
Deliver a high-quality Annual Report and
Company presentations, and implement
feedback from proxy agencies and
investors and developments in ESG
reporting requirements.
Responded to questions relating to accounting
treatment of service charges from the FRC with the
matter closed. The Annual Report is continuously
updated and upgraded using external experts
withmore structured and balanced presentation
material. The ESG reporting requirements for FY22
are set out on pages 36 to 47 of this AnnualReport.
Andrew Coombs
Crisis management
Implement the learning from the Covid-19
crisis, including remote working, IT systems
and security.
Provided new laptops to 30% of staff to support
remote working. Achieved the award of Cyber
Security Essentials certification, moved SAP to the
Cloud to improve resilience and performance and
Implemented remote management tools and
docking stations for 60% of staff to support in-office
social distancing.
Alistair Marks
Crisis management
Implement the learning from the Covid-19
crisis in the finance department and
relationship with auditors.
Reporting timetables were successfully reduced to
support the BizSpace transaction (despite increased
home working). Financial and management
reporting standards maintained throughout the
year.
Andrew Coombs
Portfolio management
Identify and grow incremental revenue
opportunities.
Increase in ancillary income of €1.7 million over
FY21, with significant increase in conferencing,
virtual office and telecoms/internet revenue.
Andrew Coombs Identify scale opportunities to grow the
business and proceed with acquisitions
where return criteria can be met, alongside
the timely disposal of non-core or mature
properties.
Completion of BizSpace acquisition in November
2021 for €448 million of enterprise value. Deployed
over €200 million into ten acquisitions in Germany
and notarised the disposal of non-core Magdeburg
asset for €13.75 million, in excess of its last reported
book value.
Alistair Marks
Financial
Modelling the Company’s growth plans
andupdating in line with activities in the
portfolio and financing opportunities.
Successful launch of the corporate
bondissuance.
Presented earnings, NAV and cash flow forecasts
routinely to the Board and addressed specific issues
or opportunities through bespoke Board papers on
corporate acquisitions, bond issuances, placing
andLTV.
Two corporate bonds launched in the year raised
€700 million in total. Maintained regular
connections with debt investors, bankers and credit
agencies. Increased S&P outlook from “stable” to
“positive” inthe year.
Alistair Marks
Financial
Embed the new Group financing structure.
Relocated Guernsey financing company in order to
optimise the Group tax structure. All necessary
approvals and confirmations have been obtained
from the relevant authorities.
By reference to the achievement of each Executive Director against their ESG/Strategic and Personal objectives detailed in the table
above and the achievement of the Adjusted FFO target, the total bonus earned is 120.83% of salary (96.67% of maximum) for both
Andrew Coombs and Alistair Marks.
The majority of Diarmuid Kelly’s bonus for FY22 relates to his service as an employee and not as an Executive Director. As noted on
pages 89 and 90, in the single total figure table we have included the bonus related to the portion of the year for which he was an
Executive Director. Since the majority of the bonus (ten out of twelve months) relates to his service other than as an Executive
Director, we have not included the detail of the performance conditions by reference to which his bonus was earned. These
conditions (which applied across the Senior Management Team) were aligned to the Executive Directors’ bonus targets, with
consistent Adjusted FFO, strategic, personal and ESG targets. In line with best practice, for FY23 and future years the performance
conditions in relation to Diarmuid Kelly’s bonus will be disclosed in the same way as for other Executive Directors.
The Committee considers the level of pay-out is reflective of the outstanding overall performance of the Group in the year as well as
the experience of our shareholders and employees. For Andrew Coombs and Alistair Marks, 65% of the bonus earned is paid in cash
with the remaining 35% deferred into a share award under the Deferred Bonus Plan, half of which vests after one year and half of
which vests after two years, with the benefit of dividend equivalents (paid in shares) in respect of dividends paid on the deferred
shares over the deferral period. For Diarmuid Kelly, the deferral under the Deferred Bonus Plan applies to 35% of his bonus earned
for the two month period after he joined the Board. For the ten month period during which he was a C-Suite Director, 35% of his
bonus is deferred in cash for one year.
The amounts included in the table below and the single figure table in relation to Diarmuid Kelly relate only to the bonus earned for
the period from his appointment to the Board.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Annual bonus continued
ESG objectives, personal objectives and strategic objectives 2022 financial year – outturn continued
106
Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
Executive Director Bonus earned
Bonus paid
in cash
Bonus deferred into shares
Vesting after
one year
Vesting after
two years
Andrew Coombs
(1)
€691,553 €449,509 €121,021 €121,021
Alistair Marks €431,821 €280,683 €75,568 €75,568
Diarmuid Kelly €45,314 €29,454 €7,930 €7,930
(1) Converted to euros based on the exchange rate of 1.18.
LTIP awards vesting in respect of the year ended 31 March 2022
Awards granted under the 2018 LTIP to each of Andrew Coombs, Alistair Marks and Diarmuid Kelly on 14 June 2019, in the form of
nil-cost options, with a performance period which ended on 31 March 2022 vested on 13 May 2022.
As shown in the tables below for Andrew Coombs, Alistair Marks and Diarmuid Kelly, the 2018 LTIP award granted in FY20 vested at
100% of the maximum number of shares.
Award
Weighting %
of award
Performance
measure Threshold Target Maximum Actual
Number of
shares vesting
Ordinary award
Two-thirds Annualised
TNR
(1)
growth
7.5%: 166,667
shares vest for
each award
10%: 483,333
shares vest for
each award
13.5%: 800,000
shares vest for
each award
17.9% 800,000
One-third Relative TSR
(2)
against the
peer group
Median: 83,333
shares vest for
each award
n/a Upper quartile:
400,000 shares
vest for each
award
Ranked 4,
upper
quartile
400,000
Outperformance
award
100% Annualised
TNR growth
13.5%: nil
shares vest for
each award
n/a 15%: 300,000
shares vest for
each award
17.9% 300,000
Diarmuid Kelly’s 2018 LTIP award granted in FY20 in the form of only an “ordinary award” over 250,000 shares in respect of his role
prior to being appointed as an Executive Director. The award was subject to similar performance conditions to those above, as follows:
Award
Weighting %
of award
Performance
measure
Threshold
(25% vesting)
Target
(62.5% vesting) Maximum Actual
Number of
shares vesting
Ordinary award
Two-thirds Annualised
TNR
(1)
growth
7.5% 10% 13.5% 17.9% 166,667
One-third Relative TSR
(2)
against the
peer group
Median n/a Upper quartile Ranked 4,
upper
quartile
83,333
(1) Calculated as annualised growth in adjusted net asset value plus dividends paid. Adjusted net asset value means the net asset value of the
Company adjusted for the fair value of derivative hedging instruments, deferred tax and goodwill.
(2) TSR peer group: A&J Mucklow Group Plc, Workspace Group Plc, SEGRO Plc, Big Yellow Group Plc, Safestore Holdings Plc, Custodian REIT Plc,
Warehouse REIT Plc, RDI REIT Plc, Regional REIT Limited, VIB Vermögen AG, alstria office REIT-AG, TLG Immobilien, Hamborner REIT AG, DIC Asset
AG and Aroundtown SA.
The vesting of the 2018 LTIP award granted in FY20 for Andrew Coombs and Alistair Marks was subject to a requirement that the
Company’s LTV ratio policy over the applicable performance period in the opinion of the Committee had not been materially exceeded.
In addition to this, the Committee considered the underlying performance of the Group during the performance period, taking into
account overall business performance and whether there had been a significant negative event (such as an ESG event) which would
warrant an adjustment. The Committee concluded that the LTV policy had not been materially exceeded and that there had not been
any negative event warranting adjustment. Accordingly, it confirmed the proposed vesting outcome of 100% of the maximum number
of shares to be appropriate.
The awards are subject to a two year holding period following vesting. The rules of the 2018 LTIP and the Company’s Directors’
Remuneration Policy permit that holding period to be operated on the basis that the shares cannot be acquired until the end of it, or
that they can be acquired following vesting but that the shares acquired must (other than any sold to cover tax liabilities) be retained
until the end of it.
107
Sirius Real Estate Limited Annual Report and Accounts 2022
LTIP awards vesting in respect of the year ended 31 March 2022 continued
Therefore, the vesting for each Executive Director will be:
Executive Director Number of awards granted Vesting (% maximum) Total number of shares vesting
Total estimated value
of award on vesting
Andrew Coombs 1,500,000 100% 1,500,000 €2,017,800
Alistair Marks 1,500,000 100% 1,500,000 €2,017,800
Diarmuid Kelly 250,000 100% 250,000 €14,012
(1)
(1) The value of the award on vesting, included in the table above and the single figure table, is the value of 2/48 of the vesting shares (calculated as set
out below) reflecting the proportion of the four year performance period for which Diarmuid Kelly was a Director.
The value of the vesting awards is based on the share price at the date of vesting (£1.14), being €1.345 converted to euros based on
the exchange rate of 1.18. The estimated value of the vesting awards has been included within the “single figure” total remuneration
table on page 103.
The 2018 LTIP awards were granted on 14 June 2019 when the share price was €0.73. Therefore, the amount of the vested award
attributable to share price appreciation was €0.615 per share (not taking into account fluctuations in exchange rates).
LTIP awards granted during the year ended 31 March 2022
Awards were granted to the Executive Directors (and other members of the Senior Management Team) on 2 August 2021 under the
2021 LTIP, as set out in the table below. Each award was granted in the form of a nil-cost option. The performance measures will be
assessed over three years and a two year holding period will then apply to any shares which vest. In line with the plan rules and the
Policy, the share price used to determine the number of shares under award was the closing price on 7 June 2021, being the day on
which the results for the year ended 31 March 2021 were announced (£1.022).
Executive Director
Maximum
number of shares
Face value
at grant
(1)
% of award vesting
at threshold % of salary
(2)
Performance period
Andrew Coombs 949,119 €1,144,600 25% 200% 1 April 2021–31 March 2024
Alistair Marks 580,000 €699,457 25% 196% 1 April 2021–31 March 2024
Diarmuid Kelly
(2)
500,000 €602,980 25% 268% 1 April 2021–31 March 2024
(1) For these purposes, the face value of the award is calculated by multiplying the number of shares by €1.20596 (being the share price of £1.022
asreferred to above, converted to euros based on the exchange rate of 1.18).
(2) The 2021 LTIP award was granted in respect of his role prior to being appointed as an Executive Director and is in line with the limits in the LTIP as
approved by shareholders at the 2021 AGM.
The targets for the 2021 LTIP grant made on 2 August 2021 are as follows:
Annualised TNR
(1)
growth over the performance period Vesting percentage
<7.5% p.a. 0% of maximum
7.5% p.a. 25% of maximum
7.5% p.a.>–<10% p.a. Pro rata vesting between 25% and 62.5% of maximum
10% p.a. 62.5% of maximum
10% p.a.>–<13.5% p.a. Pro rata vesting between 62.5% and 100% of maximum
13.5% p.a. 100% of maximum
(1) Calculated as annualised growth in adjusted net asset value plus dividends paid. Adjusted net asset value means the net asset value of the
Company adjusted for the fair value of derivative hedging instruments, deferred tax and goodwill.
Taking into account the strong total returns over the last few years these are considered to be stretching targets.
Relative TSR against the peer group
(1)
Vesting percentage
Below median 0% of maximum
Median 25% of maximum
Between median and upper quartile Pro rata vesting between 25% and 100% of maximum
Upper quartile 100% of maximum
(1) TSR peer group: Workspace Group Plc, SEGRO Plc, Big Yellow Group Plc, Safestore Holdings Plc, Custodian REIT Plc, Warehouse REIT Plc,
Regional REIT Ltd, Hamborner REIT AG, DIC Asset AG, Urban Logistics REIT Plc, Industrials REIT, CLS Holdings Plc, Londonmetric Property Plc,
Demire Deutsche Mittelstand Real Estate AG and Shurgard Self Storage SA.
DIRECTORS’ REMUNERATION REPORT CONTINUED
108
Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
Deferred Bonus Plan awards granted in the year
The following nil-cost options were granted on 21 June 2021 under the Deferred Bonus Plan in respect of bonuses earned for the
period ended 31 March 2021.
Type of award
Number
of shares awarded Face value at grant
(1)
Andrew Coombs Nil-cost option 148,108 €184,554
Alistair Marks Nil-cost option 108,258 €134,898
(1) For these purposes the face value of the award is calculated by multiplying the number of shares by £1.056 (being the share price at 21 June 2021,
converted to euros based on the exchange rate of 1.18.
On 21 June 2022, 50% of the shares will vest (rounded down to the nearest whole share where necessary) with the remaining
balance vesting on 21 June 2023, subject to the terms of the plan. Dividend equivalents will be settled in shares in respect of
dividends paid over the deferral period.
Payments made to former Directors during the year
No payments were made in the year to any former Director of the Company.
Payments for loss of office made during the year
No payments for loss of office were made in the year to any Director of the Company.
Shareholding guidelines and statement of Directors’ shareholdings and share interests
In respect of the financial year ended 31 March 2022, the Company’s shareholding guidelines required Executive Directors to have
acquired and retained a holding with a value equal to 300% of salary. Unvested share-based incentives do not count towards the
guidelines. Shares which are vested but have not been released (that is, which are in a holding period), or which have been released
but have not been exercised, count towards the guidelines on a net of assumed tax basis.
The interests of the Directors and their connected persons in the Company’s ordinary shares as at 31 March 2022 were as set out
below. The shareholdings of Andrew Coombs, Diarmuid Kelly and Alistair Marks as a multiple of salary were as at 31 March 2022
2,085%, 162% and 2,334% respectively (calculated using the then share price of £1.25 and an exchange rate of 1.18). The shareholding
guidelines have been met by both Andrew Coombs and Alistair Marks. Diarmuid Kelly was appointed to the Board on 1 February 2022
and has not met the shareholding requirements as at 31 March 2022. There have been no changes to those interests between
31March 2022 and the date of signing of these audited financial statements.
Share ownership
Shares owned as
at 31 March 2021
Shares owned as at
31 March 2022
Executive Directors
Andrew Coombs
(1)
8,447,714 9,544,593
Diarmuid Kelly n/a 292,257
Alistair Marks
(1)
6,659,078 6,673,792
Non-Executive Directors
Daniel Kitchen 100,000 143,850
Joanne Kenrick
(2)
n/a —
James Peggie 1,346,428 1,374,536
Mark Cherry — —
Caroline Britton — —
Kelly Cleveland — —
(1) Andrew Coombs and Alistair Marks have encumbered 3.00 million shares and 6.03 million shares respectively. In both cases the encumbrances
were for rolling credit facilities of up to £1.00 million in Andrew Coombs’ case and £1.75 million in Alistair Marks’ case for private purposes and for
an indefinite period.
(2) Joanne Kenrick was appointed to the Board on 1 September 2021 and to the Committee on 1 November 2021.
109
Sirius Real Estate Limited Annual Report and Accounts 2022
Shareholding guidelines and statement of Directors’ shareholdings and share interests continued
Share plan interests
Director Award Date of grant
Number of
shares subject
to award as at
1 April
2021
Number of
shares subject to
awards granted
during the
financial year
Number of
shares in respect
of which award
surrendered/
lapsed during
thefinancial year
Number of
shares in respect
of which award
vested and/or
exercised during
the financial year
Number of
shares subject
to award as at
31 March
2022 Status
Andrew
Coombs
2018 LTIP 14 June 2019 1,500,000 — — — 1,500,000
Unvested subject to
performance conditions
(1)
DBP 14 June 2019 106,652 — — 106,652 —
Vested
(2)
2018 LTIP 15 June 2020 1,000,000 — — — 1,000,000
Unvested subject to
performance conditions
(3)
DBP 15 June 2020 173,890 — — 86,945 86,945
Unvested, not subject to
performance conditions
(4)
2021 LTIP 2 August 2021 — 949,119 — — 949,119
Unvested subject to
performance conditions
(5)
DBP 21 June 2021 — 148,108 — — 148,108
Unvested, not subject to
performance conditions
(6)
Alistair
Marks
2018 LTIP 14 June 2019 1,500,000 — — — 1,500,000
Unvested subject to
performance conditions
(1)
DBP 14 June 2019 81,268 — — 81,268 —
Vested
(2)
2018 LTIP 15 June 2020 1,000,000 — — — 1,000,000
Unvested subject to
performance conditions
(3)
DBP 15 June 2020 134,328 — — 67,164 67,164
Unvested, not subject to
performance conditions
(4)
2021 LTIP 2 August 2021 — 580,000 — — 580,000
Unvested subject to
performance conditions
(5)
DBP 21 June 2021 — 108,258 — — 108,258
Unvested, not subject to
performance conditions
(6)
Diarmuid
Kelly
2018 LTIP 14 June 2019 250,000 — — — 250,000
Unvested subject to
performance conditions
(1)
2018 LTIP 15 June 2020 250,000 — — — 250,000
Unvested subject to
performance conditions
(3)
2021 LTIP 2 August 2021 — 500,000 — — 500,000
Unvested subject to
performance conditions
(5)
(1) These awards are subject to performance conditions as set out on page 107. The awards vested on 13 May 2022 at 100%.
(2) 50% of the shares vested on 14 June 2021.
(3) These awards are subject to performance conditions as set out on page 95 of the Annual Report and Accounts for the year ended 31 March 2021.
For Diarmuid Kelly, the performance conditions are the same as those set out in his 2019 LTIP awards as set out on pages 107 and 108.
(4) These awards will vest in respect of 50% of the shares on each of 15 June 2021 and 15 June 2022.
(5) These awards are subject to performance conditions as set out on page 107.
(6) These awards will vest in respect of 50% of the shares on each of 21 June 2022 and 21 June 2023.
Implementation of Directors’ Remuneration Policy for the 2023 financial year
Information on how the Company intends to implement the new Remuneration Policy for the financial year ending 31 March 2023
isset out in the Committee Chairman’s letter on page 91.
DIRECTORS’ REMUNERATION REPORT CONTINUED
110
Sirius Real Estate Limited Annual Report and Accounts 2022
Total shareholder return performance graph and CEO remuneration
The graph below shows the total shareholder return (“TSR”) performance for the Company’s shares in comparison to the FTSE 250
for the period 1 April 2012 to 31 March 2022. The Company is a constituent of this index and, as such, it has been selected as an
appropriate comparator group. For the purposes of this graph, TSR has been calculated as the percentage change during the period
in the market price of the shares, assuming that dividends are reinvested. The graph shows the value by 31 March 2022 of €100
invested in the Group over the period compared with €100 invested in the FTSE 250.
The total remuneration of the CEO over the past six
(1)
financial years is shown below. The annual bonus pay-out and LTIP vesting
level as a percentage of the maximum opportunity are also shown.
Year ended 31 March
Total remuneration
€
Annual bonus
(% maximum)
LTIP vesting
(% maximum)
2022 3,356,559 97% 100%
2021 2,795,766 100% 100%
2020 968,598 95% —
2019 6,631,533 95% 96%
(2)
2018 989,175 100% —
2017 906,143 83% —
(1) The Company was admitted to the Main Market of the London Stock Exchange and the Main Board of the Johannesburg Stock Exchange in March 2017.
(2) The 2015 LTIP vested in full in this year, having only had one single award grant in 2015 when the Company was listed on the Alternative Investment
Market of the London Stock Exchange. As announced on 28 June 2018, the Executive Directors voluntarily surrendered 4% of their awards, to enable the
awards to be reallocated to 79 employees who did not participate in the 2015 LTIP. The percentage in the table is post-surrender of those shares.
Relative importance of spend on pay
The table below demonstrates the relative importance of the Group’s expenditure on total employee pay compared to dividend
payments to shareholders. There were no share buybacks during either financial year.
2022
€000
2021
€000 % change
Dividend payments 44,490 37,596 18.33%
Total employee pay 28,496 22,262 28.00%
Advice to the Committee
Andrew Coombs and Alistair Marks occasionally attended meetings of the Committee and provided information and support as
requested. No Executive Director was involved in determining their own remuneration.
The Committee received objective and independent advice from Deloitte LLP during the year ended 31 March 2022. Deloitte LLP
isa founder signatory to the Remuneration Consultants Group’s Code of Conduct and as such voluntarily operates under the Code
of Conduct in relation to executive remuneration consulting in the UK. Deloitte’s fees for providing remuneration advice to the
Committee were £22,750 for the year ended 31 March 2022. Deloitte was appointed by the Committee and has provided share
scheme advice and general remuneration advice to the Company.
$900
$800
€700
$600
$500
$400
$300
$200
$100
$0
Sunday
1 April 2012
Sunday
31 March 2013
Monday
31 March 2014
Tuesday
31 March 2015
Thursday
31 March 2016
Friday
31 March 2017
Saturday
31 March 2018
Sunday
31 March 2019
Tuesday
31 March 2020
Wednesday
31 March 2021
Thursday
31 March 2022
Sirius Real Estate FTSE 250
Strategic report Governance Financial statements
111
Sirius Real Estate Limited Annual Report and Accounts 2022
Statement of voting at the previous Annual General Meeting
The Company remains committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. The following
table sets out the actual voting in respect of the non-binding shareholder votes on the Directors’ Remuneration Policy and the
Directors’ remuneration report and the binding shareholder vote on the Company’s LTIP Plan Rules at the Company’s Annual
General Meeting on 30 July 2021.
Resolution Votes for % of votes Votes against % of votes Votes withheld
Remuneration Policy 652,865,047 89.93% 73,139,370 10.07% 3,997,419
2021 Long Term Incentive Plan 721,532,864 99.33% 4,841,692 0.67% 3,627,280
Remuneration report 668,147,085 92.95% 50,690,157 7.05% 11,164,594
In accordance with the JSE Listings Requirements, as the non-binding advisory vote at the 2020 AGM on the Remuneration Policy
was voted against by more than 25% of the votes exercised at the meeting by the Company’s shareholders, the Company extended
an invitation to dissenting shareholders to engage with the Committee. No shareholders responded to the invitation. We have,
however, engaged extensively with shareholders and investor agencies over their concerns and considered them during our review
of the Remuneration Policy in 2021.
Shareholder engagement
I welcome dialogue with our shareholders. If you have any questions for me as Chairman of the Committee, you can reach me via the
Company Secretary.
Approved by the Board on 10 June 2022.
James Peggie
Chairman of the Remuneration Committee
10 June 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED
112
Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and financial statements in accordance with applicable law
andregulations.
Companies (Guernsey) Law, 2008 requires the Directors to
prepare financial statements for each financial year. Under that
law they have prepared the financial statements in accordance
with International Financial Reporting Standards (“IFRS”) as
issued by the IASB and applicable law.
Under Companies (Guernsey) Law, 2008 the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and of its profit or loss for that period.
In preparing these financial statements, the Directors are
required to:
» select suitable accounting policies in accordance with IAS 8
“Accounting Policies, Changes in Accounting Estimates and
Errors” and then apply them consistently;
» make judgements and accounting estimates that are
reasonable and prudent;
» present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
» state that the Group has complied with IFRS as issued by the
IASB, subject to any material departures disclosed and
explained in the financial statements;
» provide additional disclosures when compliance with the
specific requirements of IFRS as issued by the IASB is
insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the
Group’s financial position and performance; and
» prepare the Group’s financial statements on a going concern
basis, unless it is inappropriate to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to
ensure that the Annual Report and financial statements comply
with the Companies (Guernsey) Law, 2008. They are responsible
for such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Company and to
prevent and detect fraud and other irregularities.
Responsibility statement of the Directors
inrespect of the Annual Report and
financialstatements
Each of the Directors confirm to the best of their knowledge:
» the financial statements, prepared in accordance with IFRS
asissued by the IASB, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
and the undertakings included in the consolidation taken as
awhole; and
» the Strategic report includes a fair review of the development
and performance of the business and the position of the
Company and the undertakings included in the consolidation
taken as a whole together with a description of the principal
risks and uncertainties that they face.
Each of the Directors confirm to the best of their knowledge
that the Annual Report and financial statements, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
By order of the Board
Daniel Kitchen
Chairman
10 June 2022
Declaration by Group Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”)
for the year ended 31 March 2022 (additional declaration as required by the rules of the JSE Limited)
The Directors, whose names are stated below, hereby confirm that:
(a) the annual financial statements set out on pages 127 to 130, fairly present in all material respects the financial position, financial
performance and cash flows of the issuer in terms of IFRS;
(b) no facts have been omitted or untrue statements made that would make the annual financial statements false or misleading;
(c) internal financial controls have been put in place to ensure that material information relating to the issuer and its consolidated
subsidiaries have been provided to effectively prepare the financial statements of the issuer; and
(d) the internal financial controls are adequate and effective and can be relied upon in compiling the annual financial statements,
having fulfilled our role and function within the combined assurance model pursuant to principle 15 of the King Code. Where we
are not satisfied, we have disclosed to the Audit Committee and the auditors the deficiencies in design and operational effectiveness
of the internal financial controls and any fraud that involves Directors, and have taken the necessary remedial action.
Andrew Coombs Diarmuid Kelly
CEO CFO
10 June 2022 10 June 2022
113
Sirius Real Estate Limited Annual Report and Accounts 2022
DIRECTORS’ REPORT
The Directors submit their report with the audited financial
statements for the year ended 31 March 2022. A review of
theGroup’s business and results for the year is contained
intheChairman’s statement, the Asset management review
andthe Financial review which should be read in conjunction
with this report.
The Directors have complied with the provisions of the Companies
(Guernsey) Law, 2008 (the “Companies Law”) in preparing the
financial statements. The Directors confirm to the best of their
knowledge and belief that the Company has complied with the
Companies Law and the Company’s Articles of Incorporation
throughout the financial year ended 31 March 2022.
The Directors submit their report together with the consolidated
income statement, consolidated statement of comprehensive
income, consolidated statement of financial position,
consolidated statement of changes in equity, consolidated
statement of cash flows and related notes for the financial
yearended 31 March 2022 set out on pages 131 to 176, which
have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the IASB and in
accordance with any relevant enactment for the time being in
force, and are in agreement with accounting records, which
have been properly kept in accordance with Section 238 of
theCompanies Law.
Business of the Group
Sirius Real Estate Limited is the Group’s holding company.
Theprincipal activity of its operating subsidiaries is the
investment in, and development of, commercial property
toprovide conventional and flexible workspace in Germany
andthe UnitedKingdom.
Results and dividends
These results are set out in the consolidated income statement
on page 127.
The Group’s profit after tax for the year was €148.0 million
(2021: €147.6 million).
The Board has authorised a dividend in respect of the second
half of the financial year ended 31 March 2022 of 2.37c per
share representing 65% of FFO, an increase of 19.7% on the
equivalent dividend last year, which represented 65% of FFO.
The total dividend for the year is 4.41c, an increase of 16.1%
onthe 3.80c total dividend for the year ended 31 March 2021,
based also on 65% of FFO. The Group has not received any
state financial assistance in connection with the Covid-19 crisis.
It is expected that, for the dividend authorised in respect of the
six month period ended 31 March 2022, the ex-dividend date
will be 6 July 2022 for shareholders on the South African
register and 7 July 2022 for shareholders on the UK register.
Itisfurther expected that for shareholders on both registers
therecord date will be 8 July 2022 and the dividend will be
paidon 18 August 2022. A detailed dividend announcement
isexpected to be made on 20 June 2022, including details of
ascrip dividend alternative.
The Group dividend policy is stated in the Financial review on
page 54. Dividends are expected to continue being paid in cash
on a semi-annual basis and shareholders may also be offered a
scrip alternative. The Board confirms the use of distribution per
share as the relevant measure of financial results for the purposes
of trading statements to comply with the JSE Listings Requirements.
Corporate governance
Details of how the Board has applied the principles and
provisions of the UK Corporate Governance Code 2018
(the“2018 Code”) are set out in the Corporate governance
report onpages 66 to 67.
Articles of Incorporation
A copy of the Articles of Incorporation is available to download
from the Company’s website, www.sirius-real-estate.com.
TheArticles of Incorporation may only be amended by a
specialresolution of the Company’s members and certain
changes to the Articles are being proposed for adoption by
members at the 2022 Annual General Meeting. These changes
are mainly those necessary or customary for a UK REIT, details
of which are set out in the Notice of Annual General Meeting.
Share capital
Details of the issued share capital, together with details of
shares issued during the year, are set out in note 27 to the
financial statements. There is one class of ordinary shares which
carries no right to fixed income. Each share carries the right to
one vote at a general meeting of the Company.
Restrictions on voting rights
No person has any special rights of control over the Company’s
share capital and all issued shares are fully paid. The Directors
are not aware of any agreements between holders of the
Company’s shares that may result in restrictions on voting
rightsin the Company’s securities.
Restrictions on transfers of securities
There are no specific restrictions on the size of a holding or on
the transfer of shares, which are both governed by the general
provisions of the Articles of Incorporation and prevailing legislation.
Restrictions are being proposed to the Articles of Incorporation,
for adoption by shareholders at the 2022 AGM. These changes
are necessary consequential to the Company’s conversion to a
UK REIT. The Directors are not aware of any agreements
between holders of the Company’s shares that may result in
restrictions on the transfer of securities or on voting rights.
Employee share plans
Details of employee share plans are set out in note 9 to the
financial statements.
Employee Benefit Trust
No votes are cast in respect of the shares held in the Employee
Benefit Trust in connection with the Company’s share plans and
dividends paid and payable are subject to a standing waiver.
Dividend waivers
The value of dividends waived during the year ended 31 March
2022 by the Employee Benefit Trust as described above was
€143,000 (2021: €111,200). Other than the standing waiver
provided by the Employee Benefit Trust, the Directors are not
aware of any shareholder which has waived its right to receive
dividends on any shares held by it.
Authority to purchase shares
The Company was authorised at the 2021 Annual General
Meeting (“AGM”) to purchase its own shares, within certain limits
and as permitted by the Articles of Incorporation. Arenewal of
this authority will be proposed at the 2022 AGM. No shares were
purchased during the year and no shares are held in Treasury.
114
Sirius Real Estate Limited Annual Report and Accounts 2022
Strategic report Governance Financial statements
Authority to allot shares
Subject to the Companies Law and any relevant authority of the
Company in general meeting, the Company has authority to
issue new shares. At the 2021 AGM, shareholders authorised
the Directors to allot shares in the capital of the Company within
certain limited circumstances and as permitted by the Companies
Law. A renewal of this authority will be proposed at the 2022 AGM.
A scrip dividend authority was approved at the 2021 AGM and
the Directors are seeking this authority again at the 2022 AGM.
Directors
Details of the Directors who served during the financial year
andtheir meeting attendance are set out on page 73 of the
Corporate governance report. The Corporate governance report
also describes the effects the principal decisions taken by the
Directors have had on the Company’s key business relationships
with colleagues, tenants, suppliers and others.
In accordance with the 2018 Code, all the Directors will stand for
election or re-election at the AGM on 6 July 2022. The Chairman
has reviewed the performance of each Director standing for
election or re-election and is satisfied that each continues to be
effective and demonstrates commitment to therole.
The Articles of Incorporation permit the Board to authorise any
matter which would otherwise involve a Director breaching his
duty under the Companies Law to avoid conflicts of interest.
When authorising a conflict of interest, the Board must do so
without the conflicted Director counting as part of the quorum.
In the event that the Board considers it appropriate, the
conflicted Director may be permitted to participate in the
debate but will be permitted neither to vote nor count in the
quorum when the decision is being agreed. The Directors are
aware that it is their responsibility to inform the Board of any
potential conflicts as soon as possible and procedures are in
place to facilitate disclosure.
The Articles of Incorporation sets out the Company’s rules
regarding the appointment and replacement of Directors.
TheBoard may appoint an eligible person, who is willing to act
as a Director of the Company, either as an additional Director or
to fill a casual vacancy. Any such Director must retire from office
at the next AGM at which he or she may stand for election by
the shareholders. A Director may be removed by written notice
approved by all the other Directors. The Company may appoint
or remove a Director by ordinary resolution without prejudice
toany claim for damages for breach of contract that Director
may have.
Related party transactions
Other than those described in note 30 to the financial statements,
there were no transactions, arrangements or agreements
entered into during the financial year or outstanding as at
31March 2022 which were required to be disclosed under
Listing Rule 11 or IAS 24 “Related Party Disclosures”.
Directors’ interests in shares
The beneficial interests of the Directors in the shares of the
Company and the options held as at 31 March 2022 are set out
in the Directors’ remuneration report on page 109. None of the
Directors serving at the year end had a beneficial interest in the
share capital of any subsidiary company.
Directors’ indemnity and insurance
The Company has made third party indemnity provisions for
thebenefit of its Directors which were in place during the year
and remain in force at the date of this report. The Company
maintains Directors’ and officers’ liability insurance for its
Directors and officers.
Substantial shareholders
At 31 March 2022, the following shareholders had notified the
Company of substantial interests over 5% in the issued share
capital of the Company.
Shareholder
Number of
ordinary shares
in which
interested
(1)
% of issued
share capital
of the
Company
(1)
BlackRock Inc 125,365,340 10.69%
Standard Life Aberdeen Plc 121,749,643 10.39%
(1) As at date of notification and as at 31 March 2022.
As at 31 March 2022, 102 non-public owners held 1.99% of
shares (there are no Treasury Shares), which includes those
shares held by Executive and Non-Executive Directors, and
there were 7,845 public shareholders holding 98.01%.
Going concern
The Group has prepared its going concern assessment for the
period to the end of June 2023 (the “going concern period”).
The Group’s going concern assessment is based on a forecast
of the Group’s future cash flows. This considers management’s
base case scenario and a severe but plausible scenario where
sensitivities are applied to model the outcome on the occurrence
of downside assumptions explained below. It considers the
Group’s Principal Risks and Uncertainties and is dependent on
anumber of factors including financial performance, continued
access to lending facilities (see note 24) and the ability to
continue to operate the Group’s secured and unsecured debt
structure within its financial covenants.
The severe but plausible scenario models a potential downturn
in the Group’s performance, including the potential impact of
downside macro-factors such as the Ukrainian crisis and new
Covid-19 variants, on the Group’s financial position and future
prospects. The cash flow projections incorporate assumptions
on future trading performance and potential valuation
movements in order to estimate the level of headroom on
facilities and covenants for loan to value, debt service cover and
occupancy ratios set out within the relevant finance agreements.
The impact of the crisis in Ukraine and Covid-19 on the business
in the year to 31 March 2022 did not result in any deterioration
in the Group’s income streams or falls in asset values both of
which increased in the period.
The base case and severe but plausible downside scenarios
include the following assumptions:
Base case:
» growth in rent roll at 31 March 2022, principally from
contractual increases in rents and organic growth through
lease renewals;
» increasing cost levels in line with forecast inflation of 7%;
» continuation of forecast capex investment;
» continuation of forecast dividend payments;
» payment of loan interest and loan amortisation amounts and
assumed refinancing of the €15 million of the Schuldschein
facility in December 2022 and January 2023; and
» no acquisitions over and above those legally committed to.
Severe but plausible downside scenario:
» reduction in occupancy of 5% per annum from the 31 March
2022 rent roll;
» reduction in service charge recovery of 5% per annum from
the 31 March 2022 recovery levels; and
» reduction in property valuations of 5% per annum.
115
Sirius Real Estate Limited Annual Report and Accounts 2022
Going concern continued
Severe but plausible downside scenario: continued
In the severe but plausible downside scenario, the Group is
expected to comply with its loan covenants with no cure
payments or breaches forecast, continue to operate within the
terms of its facilities and have sufficient cash reserves.
The Directors also evaluated potential events and conditions
beyond 30 June 2023 that may cast significant doubt on the
Group’s ability to continue as a going concern, specifically, the
ability of the Group to refinance or extend the €20 million
Schuldschein facility in July 2023, €172 million Berlin Hyp AG
loan in October 2023 and €58 million Deutsche Pfandbriefbank
AG loan in December 2023. The Directors are of the view that
they have a realistic prospect of securing this refinancing or an
alternative source of secured or unsecured funding, a
judgement which was informed by the Group’s financial
forecasts, the Group’s track-record in previously refinancing
maturing debt (including the recent €300 million corporate
bond issuance in November 2021) and the period of time the
Group has to arrange refinancing. Should the debt facilities
falling due in July 2023, October 2023 and December 2023
notbe refinanced or extended, alternative options could be
considered, including the use of mitigating factors referred
tobelow. The mitigating factors are within the control of the
Directors and there is sufficient time for such mitigating factors
to be implemented, if required.
In each of the scenarios considered for going concern, the
Group is not dependent on any mitigating actions which would
be available to the Group in the going concern review period to
June 2023, which include restricting dividends, reducing capital
expenditure or the disposal of unencumbered assets that have
a book value of €1.6 billion as at 31 March 2022.
The Directors have not identified any material uncertainties
which may cast significant doubt on the Group’s ability to
continue as a going concern for the duration of the going
concern period. After due consideration, the Board believes it is
appropriate to adopt the going concern basis in preparing the
financial statements.
Valuation and net assets
(i) Valuation
Cushman & Wakefield LLP valued the Group’s owned
properties, including assets held for sale, at €2,092.8 million
asat 31 March 2022 (2021: €1,350.8 million). After adjusting
investment properties for lease incentive accounting, the book
value of investment properties including assets held for sale is
shown as €2,074.9 million (2021: €1,347.2 million) in the
consolidated statement of financial position.
(ii) Net assets
The investment property valuation has been incorporated into
the financial statements for the year ended 31 March 2022 and
the net assets of the Group at that date amounted to
€1,191.1million (2021: €926.8 million).
Treasury operations and financial instruments
The Group’s policy in relation to financial risk management and
the use of financial instruments is set out in notes 25 and 26 to
the financial statements.
Change of control
The Company is not a party to any significant agreements that
would be affected by a change of control of the Company
following a takeover of the Group. Certain of the Company’s
subsidiaries are parties to an agreement relating to the Titanium
portfolio, which would be affected by a direct or indirect
acquisition of 24.99% or more of the Company’s issued share
capital or total voting rights. In this situation and in the absence
of any other relevant factors, the venture partner, AXA IM Alts,
may exercise a right to acquire the subsidiaries’ shares in the
Titanium portfolio at fair value.
No agreement between any Director and the Company provides
for compensation for loss of office or employment in the event
of a takeover of the Company, except for provisions in the rules
of the Company’s share plans which may result in the vesting
ofoptions or awards granted to employees on a takeover.
Political donations
No political donations or contributions were made during the
year by the Company or any subsidiary company to any political
party, candidate or holder of public office.
Annual General Meeting
The Company’s Annual General Meeting will be held at 10.00am
(UK time) on Wednesday 6 July 2022 at 33 St James’ Square,
London SW1Y 4JS. Further information can be found in the
Shareholder Circular and Notice of Meeting which accompany
this Annual Report and Accounts.
Company website
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website, www.sirius-real-estate.com, and for the
preparation and dissemination of financial statements.
Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Disclosures required under UK Listing Rule 9.8.4
There are no disclosures required to be made under LR 9.8.4R
which have not already been disclosed elsewhere in this
Directors’ report.
Auditors and disclosure of information
toauditors
On the recommendation of the Audit Committee, the Board of
Directors proposes to the Annual General Meeting to be held on
6 July 2022 that Ernst & Young LLP (“EY”) be reappointed as
auditors of the Company. EY are accredited as an audit firm by
JSE Limited.
The Directors who held office at the date of approval of the
financial statements confirm that, so far as they are each aware:
» there is no relevant audit information of which the Company’s
auditors are unaware; and
» each Director has taken all the steps that he or she ought to
have taken as a Director to make him or herself aware of any
relevant audit information and to establish that the Company
auditors are aware of that information.
By order of the Board
Anthony Gallagher
Company Secretary
10 June 2022
DIRECTORS’ REPORT CONTINUED
116
Sirius Real Estate Limited Annual Report and Accounts 2022
Financial statements
118 Independent auditor’s report
127 Consolidated income statement
127 Consolidated statement of comprehensive income
128 Consolidated statement of financial position
129 Consolidated statement of changes in equity
130 Consolidated statement of cash flows
131 Notes to the financial statements
177 Business analysis (Unaudited Information)
184 Annex 1– Non-IFRS Measures
188 Glossary of terms
190 Corporate directory
FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Sirius Real Estate
Limited (the “Company”) and its subsidiaries (the ”Group”) for
the year ended 31 March 2022 which comprise the
Consolidated income statement, the Consolidated statement of
comprehensive income, the Consolidated statement of changes
in equity, the Consolidated statement of financial position, the
Consolidated statement of cash flows and the related notes 1 to
34, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial
Reporting Standards.
In our opinion, the financial statements:
» give a true and fair view of the state of the Group’s affairs as at
31 March 2022 and of its profit for the year then ended;
» have been properly prepared in accordance with International
Financial Reporting Standards; and
» have been properly prepared in accordance with the
requirements of The Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in
the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the Group and Company in accordance
with the ethical requirements that are relevant to our audit of
the financial statements, including the UK FRC’s Ethical
Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Group or the Company and we remain
independent of the Group and Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
thedirectors’ use of the going concern basis of accounting
inthe preparation of the financial statements is appropriate.
Ourevaluation of the directors’ assessment of the Group’s
ability to continue to adopt the going concern basis of
accounting included:
» We obtained an understanding of the process followed
byManagement to prepare the Group’s going concern
assessment over the going concern period to 30 June 2023,
including challenging the completeness of risks identified
inManagement’s assessment, identifying and assessing
scenarios that may arise as a result of the ongoing conflict
inUkraine and other macro-economic factors (including
Covid-19, forecast inflation levels and interest rates) which
may adversely affect future occupancy and income levels
andthe impact of a fall in property valuations on compliance
with loan covenants.
» We obtained the base case scenario and the severe but
plausible downside scenario covering the going concern
period prepared by Management and provided to the Board.
We challenged Management on whether the scenarios
considered were sufficient to allow them to form their view
ongoing concern. We tested the mathematical accuracy of
the models and verified the opening available cash balance
inManagement’s cash flow forecast by comparing it to
theyear-end cash balance which was subject to our
auditprocedures.
» We challenged the appropriateness of each of the key
assumptions through agreeing them to supporting evidence
and searching for contradictory evidence, using our
understanding of the Group’s business, evidence gained
during the audit and our industry knowledge. We assessed
the historical forecasting accuracy as an input into
determining the ability of Management to forecast for the
going concern period.
» We used our Chartered Surveyors to challenge the stress
tests applied to forecast reductions in property valuations
inthe severe but plausible downside scenario. We applied
further sensitivities where appropriate to stress test the
impact on forecast available cash.
» We checked the modelled details of the lending terms and
covenants back to lender agreements, verifying the key terms
and confirming the availability of the debt facilities in the
going concern period.
118
Sirius Real Estate Limited Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT
to the members of Sirius Real Estate Limited
Conclusions relating to going concern
continued
» We performed testing to evaluate whether the covenant
requirements of the debt facilities would be breached under
the severe but plausible downside scenario prepared by
Management and applied additional stress tests to observe
their impact on liquidity. We performed additional reverse
stress testing to understand the fall in valuations and/or
occupancy needed to use remaining liquidity. In assessing the
likelihood of these scenarios, we considered the perspective
of our Chartered Surveyors, assessed the impact of the
timing of these events and understood the availability of
mitigating actions to be taken.
» We challenged Management’s assessment of events or
conditions after the going concern period that may cast
significant doubt on the entity’s ability to continue as a going
concern. Management identified the need to repay or
refinance the €20m Schuldschein in July 2023, €172m Berlin
Hyp AG debt facility in October 2023 and €58m Deutsche
Pfandbriefbank AG debt facility in December 2023. We
challenged whether there was a realistic prospect that the
Group would be able to complete these refinancings within
the timescale required. Our audit procedures included
considering the perspective of EY Debt Advisory Specialists
in the UK and Germany on the probability of being able to
refinance, the reasonableness of the expected refinancing
requirements and assessing the historical ability to refinance
debt when required.
» We reviewed the disclosures in the Annual Report and
Accounts in relation to going concern with a view to assessing
whether they appropriately disclose the risks, the impact on
the Group’s operations and results and the availability of
mitigating actions to be taken.
Our key observations on going concern include:
» The Group’s activities are financed in part through external
debt financing. Under the severe but plausible downside
scenario the Group is expected to comply with its loan
covenants with no cure payments or breaches forecast.
» There are refinancings that fall due in July 2023 (€20m),
October 2023 (€172m) and December 2023 (€58m) and
Management has concluded that there is a reasonable
prospect that the Group will be able to complete the required
refinancings that fall due after the end of the going concern
period. Management’s judgment is informed by the Group’s
financial forecasts, the Group’s track-record in previously
refinancing maturing debt (including the recent €300m
corporate bond issuance in November 2021) and the length
of time the Group has to arrange refinancing.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group’s ability to continue as a going concern for the going
concern period to 30 June 2023. Going concern has also been
determined to be a key audit matter.
In relation to the Group’s reporting on how they have applied
the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement
in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis
ofaccounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee
as to the Group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope
» The Group operates in both Germany and the United Kingdom. During the year the Group acquired Helix
Investments Limited (“BizSpace”) which has been identified as a full scope component. We performed an audit
of the complete financial information of both the German and United Kingdom components.
» The components where we performed full or specific audit procedures accounted for 100% of Adjusted profit
before tax, 100% of Revenue and 100% of Total assets.
» The Group audit team also performed direct audit procedures on investment in associates included within the
Group financial statements.
Key audit
matters
» The valuation of the investment property portfolio
» Revenue recognition, including the timing of revenue recognition, the treatment of rents, service charge income
and lease incentives
» Going concern basis used in the preparation of the financial statements
» (New in 2022) Accounting for the acquisition of BizSpace, including the purchase price allocation and assessing
goodwill for impairment
Materiality
» Overall Group materiality of €23.6m (2021: €15.1m) which represents 1% of Total assets (1% of Total assets) was
applied to balances related to investment properties, loans and derivatives.
» Specific materiality of €3.9m (2021: €3.0m) which represents 5% of Adjusted profit before tax (2021: 5% of adjusted
profit before tax) was applied to account balances not related to investment properties, loans, or derivatives.
Strategic report Governance Financial statements
119
Sirius Real Estate Limited Annual Report and Accounts 2022
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and
our allocation of performance materiality determine our audit
scope for each subsidiary within the Group. This enables us to
form an opinion on the Group financial statements. We take into
account size, risk profile, the organisation of the Group and
effectiveness of controls, and changes in the business
environment when assessing the level of work to be performed.
All audit work was performed directly by a single integrated
audit team.
In assessing the risk of material misstatement to the Group
financial statements, and to ensure we had adequate
quantitative coverage of significant accounts in the financial
statements, we selected both components covering entities
within Germany and the United Kingdom, which represent the
principal business units within the Group.
Of the two components selected, we performed an audit of the
complete financial information of both components (“full scope
components”) which were selected based on their size or
riskcharacteristics.
Germany United Kingdom
Revenue 91% of Group 9% of Group
Adjusted profit before tax 91% of Group 9% of Group
Total assets 80% of Group 20% of Group
For the current year, the full scope components contributed
100% (2021: 100%) of the Group’s Adjusted profit before tax,
100% (2021: 100%) of the Group’s Revenue and 100% (2021:
100%) of the Group’s Total assets.
Changes from the prior year
The Group acquired BizSpace during the year and this is the
firstyear in which we have applied a scoping assessment to our
audit. We identified two components, being Germany and the
United Kingdom, which combined, contributed to 100% of the
Total assets and Adjusted profit before tax. Both locations have
been identified as full scope components. In previous years, the
audit was approached as a single component with an integrated
team completing all audit work.
Climate change
There has been increasing interest from stakeholders as to how
climate change will impact Sirius Real Estate Limited. The Group
has determined that the most significant future impacts from
climate change on their operations will be determined from the
climate scenario analysis they intend to undertake in the
financial year to March 2023. These are explained on pages 40
to 43 in the required Task Force on Climate-Related Financial
Disclosures and on page 63 in the principal risks and
uncertainties, which form part of the “Other information,” rather
than the audited financial statements. Our procedures on these
disclosures therefore consisted solely of considering whether
they are materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit or otherwise
appear to be materially misstated.
As explained in the Task Force on Climate Disclosures on
pages40 to 43, governmental and societal responses to climate
change risks are still developing, and are interdependent of each
other, and consequently financial statements cannot capture all
possible future outcomes as these are not yet known. The
degree of certainty of these changes may also mean that they
cannot be taken into account when determining asset and
liability valuations and the timing of future cash flows under the
requirements of International Financial Reporting Standards.
Our audit effort in considering climate change was focused on
the adequacy of the Group’s disclosures in the financial
statements and their conclusion that no issues were identified
that would materially impact the valuation of the investment
properties and the investment properties held in the
investments in associates, or have any other material impact on
the financial statements. We also challenged the Directors’
considerations of climate change in their assessment of going
concern and viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or
not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in our opinion thereon, and we do not provide a
separate opinion on these matters.
In addition to the Key Audit Matter of going concern referred to
above, this year we have included a new key audit matter:
Accounting for the acquisition of BizSpace, including the
purchase price allocation and assessing goodwill for
impairment. The audit partner and other senior members of the
audit team spent a significant amount of time assessing the
judgments and appropriateness of the balances recorded due
to the complexity of this area.
120
Sirius Real Estate Limited Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Sirius Real Estate Limited
An overview of the scope of our audit continued
Key audit matters continued
Risk Our response to the risk
Key observations communicated
totheAudit Committee
The valuation of the
investment property
portfolio
2022: €2,100m
(2021:€1,362m) in
investment properties, €14m
(2021: €0m) included within
assets held for sale and
€350m (2021: €244m)
included in investments in
associates
Refer to the Audit Committee
report (pages 80 to 85);
Accounting policies (pages
131 to 138); Note 14 of the
Financial Statements (pages
154 to 157) and Note 20 of
the Financial Statements
(page 161)
The valuation of the
investment property portfolio
(including investment
properties within assets held
for sale and held in
investments in associates)
requires significant
judgement and use of
estimates by Management
and the external valuer. Any
input inaccuracies or
unreasonable bases used in
these judgements (such as in
respect of market rental
income and yields applied)
could result in a material
misstatement of the income
statement and balance sheet.
There is also a risk that
Management may influence
the significant judgements
and estimates in respect of
property valuations in order to
achieve property valuation
and other performance
targets to meet market
expectations or bonus targets.
Our audit procedures in respect of the valuation of investment
property included:
» We performed a walkthrough of the valuation process and
methodology, evaluating the Group’s controls over data used in the
valuation of the investment property portfolio and Management’s
review of the valuations.
» We evaluated the competence of the external valuer which included
consideration of their qualifications and expertise.
» We selected a sample based on factors including size, risk, type of
property and location, which in total comprised 42% of the market
value of investment properties (including investment properties
within assets held for sale and total value of investments in
associates). For the sample of properties we performed testing over
source documentation provided by the Group to the external valuer.
This included agreeing a sample of this documentation back to
underlying lease data and vouching costs incurred to date in
respect of properties with capital expenditure in the period.
» We included Chartered Surveyors on our audit team who reviewed
and challenged the valuation approach and assumptions for our
sample. Our Chartered Surveyors assessed the yield of each property
against available market evidence and/or asset specific considerations.
They also assessed whether the other assumptions applied by the
external valuer, such as the market rental income and voids were
supported by available market data. This included assessing the
external valuer’s considerations of factors such as the conflict in
Ukraine and increasing inflation and interest rates in respect of tenant
voids and rent collections, the impact on the property valuations and
investigating any contrary evidence to the assumptions adopted.
» We challenged the external valuer on whether climate factors had
been considered as part of the valuations. The external valuer
confirmed that this had been considered but did not lead to any
specific adjustments to values.
» We conducted analytical procedures by comparing assumptions
and the value of each property in the portfolio by reference to
movements in yields and rents during the year and their impact on
the valuation, along with asset specific considerations to evaluate
the appropriateness of the valuations adopted by the Group. We
challenged Management and their external valuer with our audit
findings, including contradictory evidence to obtain further
understanding of the movements in values.
» We obtained a confirmation from the external valuer that they had
not been subject to undue influence from Management.
» We utilised our analytical procedures and work of the Chartered
Surveyors described above in order to assess for evidence of undue
Management influence.
» We performed site visits accompanied by our Chartered Surveyors
for a sample of properties, to confirm existence and state of repair
of the properties.
» We assessed the adequacy of the disclosures of estimates and
valuation assumptions in note 14 and note 20 that were made
inaccordance with IFRS 13 – Fair Value Measurement.
Scope of our procedures
We performed full scope audit procedures over valuation of all
property categories, including investment properties, investment
properties held for sale and investment properties held in the
investment in associate.
We have audited the inputs,
assumptions and
methodology used by the
external valuer. We
concluded that the
methodology applied was
appropriate and that the
external valuations were a
reasonable assessment of
the market value of
investment properties at
31March 2022.
Our Chartered Surveyors
concluded that the
sampleof valuations
theyreviewed were within
areasonable range.
We concluded that the
investment property
valuations are reasonable
and did not identify
evidence of undue
Management influence.
We have reviewed the
disclosures in the financial
statements and consider
them appropriate.
Strategic report Governance Financial statements
121
Sirius Real Estate Limited Annual Report and Accounts 2022
An overview of the scope of our audit continued
Key audit matters continued
Risk Our response to the risk
Key observations communicated
totheAudit Committee
Revenue recognition,
including the timing of
revenue recognition, the
treatment of rents, service
charge income and lease
incentives
2022: €135m rental and
other income and €75m
service charge income
(2021:€105m rental and
other income and €60m
service charge income)
Refer to the Audit Committee
report (pages 80 to 85);
Accounting policies (pages
131 to 138); and Note 6 of
the Financial Statements
(page142)
Market expectations and
profit-based targets may
place pressure on
Management to distort
revenue recognition. This
may result in overstatement
of revenues to assist in
meeting current or future
targets or expectations.
Our audit procedures over revenue recognition included:
» We evaluated the Group’s controls over revenue recognition and
the treatment of rents which have been designed by the Group
toprevent and detect fraud and errors in revenue recognition.
» We selected a sample of lease agreements and agreed the terms
per the lease agreements to the data input into the property
management system, including lease incentive clauses. We agreed
a sample of service charge income balances in the year to the
supporting terms of the lease agreements, invoices raised and
cashcollections.
» We performed analytical procedures using data analytics tools to
assess whether revenue had been recognised in the appropriate
accounting period. We performed anchor testing from rental
agreements to cash combined with three-way journal correlation
using data analytics. This provided substantive evidence on
occurrence and measurement of revenue, with some evidence
oncompleteness of processing.
» We agreed a sample of lease agreements to the revenue
recognised, after considering the straight-lining of lease incentives
over the lease period in accordance with IFRS 16 – Leases.
» For the service charge income, we analysed and compared our
expectation to actual service charge income recognised in the
ledger. We reviewed the service charge calculation and allocation
totenants and the recoverability of historic service charge debtors.
We selected a sample of service charge expense balances in the
year, agreeing it to supporting third party documentation and
tracing through to the expected recovery of service charge income.
» We assessed whether the revenue recognition policies adopted
complied with IFRS through sample testing transactions to
determine the underlying accounting treatment applied.
» We challenged the appropriateness of a sample manual journals
posted to revenue through obtaining evidence to support the
journal posting. The manual journals testing is specifically designed
to address the risk of management override of controls and
incorrect cut off.
Scope of our procedures
We performed full scope audit procedures over revenue recognition,
including revenue earned through the investment in associate.
We audited the timing of
revenue recognition,
treatment of rents, service
charge income and lease
incentives and assessed
therisk of management
override. Based upon
theaudit procedures
performed, we have
concluded that revenue,
service charge income and
the lease incentives have
been recognised on an
appropriate basis in theyear.
122
Sirius Real Estate Limited Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Sirius Real Estate Limited
An overview of the scope of our audit continued
Key audit matters continued
Risk Our response to the risk
Key observations communicated
totheAudit Committee
Accounting for the
acquisition of BizSpace,
including the purchase
price allocation and
assessing goodwill for
impairment
2022: €206m fair value of net
assets acquired and €37m of
goodwill initially recognised
on acquisition.
€37m impairment of
goodwillrecorded.
Refer to the Audit Committee
report (pages 80 to 85);
Accounting policies (pages
131 to 138); and Note 4 of
the Financial Statements
(page140)
The level of estimation
uncertainty of the fair value
ofassets and liabilities,
combined with the
magnitude of the balances
related to accounting for
theacquisition may result
inmaterial misstatement
tothe financial statements.
Our audit procedures over the accounting for the acquisition of
BizSpace included:
» We obtained and assessed Management’s accounting paper on the
application of IFRS 3 Business combinations, including judgements
in determining whether the acquisition represents an asset
acquisition or a business combination, and the purchase price
allocation assessment.
» We obtained and reviewed relevant sale agreements and other
contractual arrangements entered into in relation to the acquisition,
to assess the date when control of BizSpace was obtained.
» We performed testing on opening balances and reviewed the
predecessor audit files to determine the appropriateness of the
balances recorded at the date of acquisition.
» We obtained the property valuations prepared at acquisition date by
the external valuers. We selected a sample of 9 properties which
equated to 24% of the opening investment property balance for
which the valuation was tested for reasonableness by EY’s
Chartered Surveyors.
» We challenged Management and their specialist in searching for
evidence of other assets or liabilities that have been acquired but
not identified.
» Together with EY’s valuation specialists, we assessed the key
judgements made in identifying and recognising any intangibles,
including goodwill, and the estimate of the fair value of the
intangibles, including goodwill, recognised in the initial accounting.
» The acquisition generated goodwill of €37m. We challenged the
appropriateness of the assumptions used by Management and
their Specialist in the goodwill impairment test. This included using
EY valuation specialists who performed benchmarking analysis of
the discount rate against peers of the business.
» We performed sensitivity analysis over the key assumptions,
including the discount rate, terminal growth rate and forecasted
cash flows to assess the impact on goodwill impairment test.
» We determined the impact of the integration of BizSpace on the
current processes at the Group, including whether there are any
differences in accounting policies applied.
» We assessed the completeness and adequacy of the disclosures
made in the financial statements.
Scope of our procedures
We performed full scope audit procedures over the accounting for the
acquisition of BizSpace, including the purchase price allocation and
assessing goodwill for impairment.
We concluded that the
accounting treatment
applied in relation to the
acquisition is appropriate.
We concluded that the
opening balances
recognised by the Group
are appropriately stated and
the valuations in the
selected sample of
properties was assessed by
our Chartered Surveyors as
reasonable.
We concluded that the
impairment of goodwill is
appropriate.
We concluded that the
disclosures in the financial
statements are appropriate
in relation to the acquisition.
In the prior year, our auditor’s report included a key audit matter in relation to the assessment of uncertain tax positions. In the
current year, we have updated our risk assessment and concluded that the assessment of uncertain tax positions is no longer a key
audit matter. This reflects the resolution of historic areas of focus and our assessment that the remaining risk profile of the remaining
uncertain tax positions has reduced.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.
Strategic report Governance Financial statements
123
Sirius Real Estate Limited Annual Report and Accounts 2022
An overview of the scope of our audit continued
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
The table below sets out the materiality, performance materiality and threshold for reporting audit differences applied on our audit:
Basis Materiality
Performance
materiality Audit differences
Overall 1% of Total assets
(2021: 1% of Total assets)
€23.6m
(2021: €15.1m)
€17.8m
(2021: €11.3m)
€1.1m
(2021: €0.8m)
Specific – account balances not related
toinvestment properties, loans and
borrowings, derivatives and related
IncomeStatement accounts
5% of Adjusted profit before tax
(2021: 5% of Adjusted profit
before tax)
€3.9m
(2021: €3.0m)
€2.9m
(2021: €2.3m)
€0.2m
(2021: €0.1m)
When establishing our overall audit strategy, we determined a magnitude of uncorrected misstatements that we judged would be
material for the financial statements as a whole. We determined that an asset-based measure would be the most appropriate basis
for determining overall materiality given that key users of the Group’s financial statements are primarily focused on the valuation of
the Group’s assets. Based on this, we determined that it is appropriate to set the overall materiality at 1.0% of Total assets (2021:
1.0% of Total assets). We applied overall materiality to the investment property, loans and borrowings, derivatives and the related
Income Statement balances.
This provided a basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk
of material misstatement and determining the nature, timing and extent of further audit procedures.
We determined that for other account balances not related to investment properties, loans and borrowings, derivatives and the
related Income Statement balances, a misstatement of less than overall materiality for the financial statements as a whole could
influence the economic decisions of users. We believe that it is most appropriate to use a profit-based measure as profit is also a
focus of users of the financial statements.
We determined that materiality for these areas should be based upon 5% of Adjusted profit before tax. Adjusted profit before tax is
considered an important performance metric and aligned with industry earnings measures.
During the course of our audit, we reassessed initial materiality which has not resulted in a change from our planning materiality.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that
performance materiality was 75% (2021: 75%) of our planning materiality, namely €17.8m (2021: €11.3m) and €2.9m (2021: €2.3m)
respectively for overall and specific materiality levels. We have set performance materiality at this percentage based on our expectations
of identifying material misstatements and the control environment supporting the prevention of material misstatement.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based on
the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of €1.1m (2021:
€0.8m), as well as uncorrected audit differences in excess of €0.2m (2021: €0.1m) that relate to our specific testing of the other
account balances not related to investment property, loans or derivatives,, which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
124
Sirius Real Estate Limited Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Sirius Real Estate Limited
An overview of the scope of our audit continued
Other information
The other information comprises the information included in the annual report set out on pages 1 to 116, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annualreport.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
inthis report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there
is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which The Companies (Guernsey) Law, 2008 requires
usto report to you if, in our opinion:
» proper accounting records have not been kept by the Company; or
» the financial statements are not in agreement with the Company’s accounting records and returns; or
» we have not received all the information and explanations we require for our audit.
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified for
our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
» Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on pages 115 to 116;
» Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is
appropriate set out on page 64;
» Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its
liabilities set out on pages 115 and 116;
» Directors’ statement on fair, balanced and understandable set out on page 113;
» Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 54 to 63;
» the section of the annual report that describes the review of effectiveness of risk management and internal control systems set
out on page 84; and
» the section describing the work of the audit committee set out on pages 82 and 83.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 113, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
isahigh level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
materialmisstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
orintheaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
thesefinancial statements.
Strategic report Governance Financial statements
125
Sirius Real Estate Limited Annual Report and Accounts 2022
An overview of the scope of our audit continued
Auditor’s responsibilities for the audit of the financial statements continued
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
Group and management.
» We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the
most significant are those that relate to the reporting framework (IFRS, The Companies (Guernsey) Law, 2008, the UK Corporate
Governance Code and The King IV Report for Corporate Governance™ for South Africa 2016), the relevant tax regulations in the
jurisdictions the Group operates in, the General Data Protection Regulation (GDPR), Health & Safety Regulations and the Bribery
Act. There are no significant industry specific laws or regulations that we considered in determining our approach;
» We understood how Sirius Real Estate Limited is complying with those frameworks through enquiry with Management, and by
identifying the Group’s policies and procedures regarding compliance with laws and regulations. We also identified those
members of Management who have the primary responsibility for ensuring compliance with laws and regulations, and for
reporting any known instances of non-compliance to those charged with governance. We corroborated our enquiries through our
review of board minutes and papers provided to the board and the Audit Committee, as well as consideration of the results of our
audit procedures across the Group to either corroborate or provide contrary evidence which was then followed up. Our
assessment included the tone from the top and the emphasis on a culture of honest and ethical behaviour;
» We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur
byreviewing the Group’s risk register and through enquiry with Management and the Audit Committee during the planning and
execution phases of our audit. We considered the programmes and controls that the Group has established to address risks
identified, or that otherwise prevent, deter and detect fraud; and how Management monitors those programmes and controls;
» Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Ourprocedures involved:
– Enquiry of Management, and when appropriate, those charged with governance regarding their knowledge of any non-
compliance or potential non-compliance with laws and regulations that could affect the financial statements;
– Reading minutes of meetings of those charged with governance;
– Obtaining electronic confirmations from the Group’s banking providers to vouch the existence of cash balances and
completeness of loans, borrowings and other treasury positions such as derivatives;
– Obtaining and reading correspondence from legal and regulatory bodies, including the Financial Reporting Council (FRC),
theLondon Stock Exchange (LSE), the Johannesburg Stock Exchange (JSE) and tax authorities in all jurisdictions the Group
operates in; and
– Journal entry testing, with a focus on manual journals and journals indicating large or unusual transactions based on our
understanding the business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
Following the recommendation from the Audit Committee, we were appointed by the Company in 2018 to audit the Group financial
statements for the year ending 31 March 2019 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is four years, covering the years
ending 31 March 2019 to 31 March 2022.
The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies (Guernsey)
Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required
tostate to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report,
orforthe opinions we have formed.
Daniel Saunders
for and on behalf of Ernst & Young LLP
London
10 June 2022
126
Sirius Real Estate Limited Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Sirius Real Estate Limited
Notes
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Revenue 6 210,182 165,361
Direct costs 7 (87 ,689) (71,541)
Net operating income 122,493 93,820
Gain on revaluation of investment properties 14 140,884 99,585
(Loss)/gain on disposal of properties (623) 54
Recoveries from prior disposals of subsidiaries 94 65
Administrative expenses 7 (40, 718) (27 ,823)
Goodwill impairment 17 (40, 906) —
Share of profit of associates 20 6,940 4,977
Operating profit 188,164 1 70,678
Finance income 10 2,986 2, 712
Finance expense 10 (23,219) (9 ,869)
Change in fair value of derivative financial instruments 10 996 13 6
Net finance costs (19,237) (7 ,021)
Profit before tax 168, 927 163,657
Taxation 11 (20, 935) (16,097)
Profit for the year after tax 147 ,992 147 ,560
Profit attributable to:
Owners of the Company 147 ,873 147 ,451
Non-controlling interest 119 109
147 ,992 147 ,560
Earnings per share
Basic earnings per share 12 13.48c 14.16c
Diluted earnings per share 12 13.29c 13.96c
All operations of the Group have been classified as continuing.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2022
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Profit for the year after tax 147 ,992 147 ,560
Other comprehensive loss that may be reclassified to profit or loss insubsequent periods
Foreign currency translation reserve (1, 701) —
Other comprehensive loss after tax that may be reclassified toprofitorloss
insubsequentperiods (1, 701) —
Other comprehensive loss for the year after tax (1, 701) —
Total comprehensive income for the year after tax 146,291 147 ,560
Total comprehensive income attributable to:
Owners of the Company 146,1 72 147 ,451
Non-controlling interest 119 109
146,291 147 ,560
Strategic report Governance Financial statements
127
Sirius Real Estate Limited Annual Report and Accounts 2022
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2022
Notes
31 March 2022
€000
31 March 2021
€000
Non-current assets
Investment properties 14 2,100,004 1,362,192
Plant and equipment 16 5,492 2,682
Intangible assets 17 4,283 6,568
Right of use assets 18 14,996 1,919
Other non-current financial assets 19 48,330 44,960
Investment in associates 20 24,142 17 ,202
Total non-current assets 2,197 ,247 1,435,523
Current assets
Trade and other receivables 21 24,571 18,7 31
Derivative financial instruments 329 70
Cash and cash equivalents 22 150,966 6 5 , 6 74
Total current assets 1 75,866 84,475
Assets held for sale 15 13, 750 —
Total assets 2,386,863 1,519 ,998
Current liabilities
Trade and other payables 23 (89,335) (50,527)
Interest-bearing loans and borrowings 24 (19,630) (9 ,114)
Lease liabilities 18 (1,090) (5,857)
Current tax liabilities 11 (10,423) (2,063)
Derivative financial instruments — (414)
Total current liabilities (120,478) (67 ,975)
Non-current liabilities
Interest-bearing loans and borrowings 24 (961,863) (458,940)
Lease liabilities 18 (37 ,5 71) (9 ,130)
Derivative financial instruments — (797)
Deferred tax liabilities 11 (75,893) (56,331)
Total non-current liabilities (1,075,327) (525,198)
Total liabilities (1,195,805) (593,17 3)
Net assets 1,191,058 926,825
Equity
Issued share capital 27 — —
Other distributable reserve 28 5 70,369 449, 051
Own shares held 27 (6,27 4) (2,903)
Foreign currency translation reserve (1, 701) —
Retained earnings 628,258 480,385
Total equity attributable to the owners of the Company 1,190,652 926,533
Non-controlling interest 406 292
Total equity 1,191,058 926,825
The financial statements on pages 127 to 130 were approved by the Board of Directors on 10 June 2022 and were signed on its behalf by:
Daniel Kitchen
Chairman
Company number: 46442
128
Sirius Real Estate Limited Annual Report and Accounts 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2022
Notes
Issued
share
capital
€000
Other
distributable
reserve
€000
Own
shares
held
€000
Foreign
currency
translation
reserve
€000
Retained
earnings
€000
Total equity
attributable
to the
owners of
the Company
€000
Non-
controlling
interest
€000
Total
equity
€000
As at 31 March 2020 — 470,151 (1,515) — 332,934 801,570 246 801,816
Profit for the year — — — — 147 ,451 147 ,451 109 147 ,560
Other comprehensive income
for the year — — — — — — — —
Total comprehensive income
for the year — — — — 147 ,451 147 ,451 109 147 ,560
Share-based payment
transactions — 3,148 — — — 3,148 — 3,148
Own shares purchased 27 — — (1,613) — — (1,613) — (1,613)
Own shares allocated 27 — — 225 — — 225 — 225
Dividends paid 29 13,169 (37 ,41 7) — — — (24,248) (63) (24,311)
Transfer of share capital 29 (13,169) 13,169 — — — — — —
As at 31 March 2021 — 449,051 (2,903) — 480,385 926,533 292 926,825
Profit for the year — — — — 147 ,873 147 ,873 119 147 ,992
Other comprehensive income
for the year — — — (1, 701) — (1, 701) — (1, 701)
Total comprehensive income
for the year — — — (1, 701) 147 ,873 146 ,1 72 119 146,291
Shares issued 27 159 ,926 — — — — 159, 926 — 159, 926
Transaction cost relating
toshare issues 27 (6,219) — — — — (6,219) — (6,219)
Dividends paid 29 13 ,673 (44,488) — — — (30,81 5) (5) (30,820)
Transfer of share capital 29 (167 ,380) 167 ,380 — — — — — —
Share-based payment
transactions 9 — 1,945 — — — 1,945 — 1,945
Value of shares withheld to
settle employee tax obligations 9 — (3,519) — — — (3,519) — (3,519)
Own shares purchased 27 — — (5 ,545) — — (5,545) — (5 ,545)
Own shares allocated 27 — — 2,17 4 — — 2,1 7 4 — 2,1 7 4
As at 31 March 2022 — 5 70,369 (6,27 4) (1, 701) 628,258 1,190,652 406 1,191,058
Strategic report Governance Financial statements
129
Sirius Real Estate Limited Annual Report and Accounts 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
Notes
Year ended
31 March
2022
€000
Year ended
31 March
2021
€000
Operating activities
Profit for the year after tax 147 ,992 147 ,560
Taxation 11 20,935 16,097
Profit for the year before tax 168, 927 163,657
Loss/(gain) on disposal of properties 623 (54)
Recoveries from prior disposals of subsidiaries (94) (65)
Net exchange differences (1, 975) —
Share-based payments 9 4,1 73 3,148
Gain on revaluation of investment properties 14 (140,884) (99,585)
Change in fair value of derivative financial instruments 10 (996) (136)
Depreciation of property, plant and equipment 16 1,167 669
Amortisation of intangible assets 17 1,164 897
Depreciation of right of use assets 18 843 521
Goodwill impairment 17 40, 906 —
Share of profit of associates 20 (6,940) (4,977)
Finance income 10 (2,986) (2, 712)
Finance expense 10 23,219 9 ,869
Changes in working capital
Increase in trade and other receivables (5,196) (2,518)
Increase in trade and other payables 3,470 2,9 13
Taxation paid (3,671) (632)
Cash flows from operating activities 81, 750 70,995
Investing activities
Purchase of investment properties (162,844) (35,484)
Prepayments relating to new acquisitions (1,860) —
Proceeds from loss on control of subsidiaries (net of cash disposed) 94 65
Capital expenditure on investment properties (23, 786) (31,104)
Purchase of plant and equipment and intangible assets (3,540) (2, 718)
Acquisition of a subsidiary (net of cash acquired) (254, 730) —
Proceeds on disposal of properties (including held for sale) 14, 15 15,297 30
Increase in loans receivable due from associates (1,124) (5,950)
Interest received 2, 986 1,627
Cash flows used in investing activities (429,507) (73,534)
Financing activities
Proceeds from issue of share capital 27 159, 926 —
Transaction costs on issue of shares 27 (6,219) —
Shares purchased (5,545) (1,613)
Payment relating to exercise of share options 9 (3,519) —
Dividends paid to owners of the Company 29 (30,815) (24,248)
Dividends paid to non-controlling interest (5) (63)
Proceeds from loans 750 ,000 20,000
Repayment of loans (399,431) (33, 753)
Payment of principal portion of lease liabilities (5,871) (5,681)
Exit fees/prepayment of financing penalties (5,335) —
Capitalised loan issue cost (14,369) (134)
Finance charges paid (7 ,067) (7 ,558)
Cash flows from/(used in) financing activities 431, 750 (53,050)
Increase/(decrease) in cash and cash equivalents 83, 993 (55,589)
Net exchange difference 1,299 —
Cash and cash equivalents as at the beginning of the year 65,67 4 121,263
Cash and cash equivalents as at the year end 22 150,966 6 5 , 6 74
130
Sirius Real Estate Limited Annual Report and Accounts 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2022
1. General information
Sirius Real Estate Limited (the “Company” or “Sirius”) is a company incorporated in Guernsey and resident in the United Kingdom for
tax purposes, whose shares are publicly traded on the Main Market of the London Stock Exchange (“LSE”) (primary listing) and the
MainBoard of the Johannesburg Stock Exchange (“JSE”) (primary listing).
The consolidated financial information of the Company comprises that of the Company and its subsidiaries (together referred
toasthe “Group”) for the year ended 31 March 2022.
The principal activity of the Group is the investment in, and development of, commercial property to provide conventional
andflexible workand flexible workspace in Germany and the United Kingdom (“UK”).
2. Significant accounting policies
(a) Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis, except for investment properties, investment
properties held for sale and derivative financial instruments, which have been measured at fair value. The consolidated financial
information is presented in euros and all values are rounded to the nearest thousand (€000), 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. See also note 2(c) for statement of compliance.
As at 31 March 2022 the Group’s consolidated financial statements reflect consistent accounting policies and methods of
computation as used in the previous financial year, except for the changes in the application of accounting policies as described
innote 2(b), in accordance with IFRS.
(b) Changes in accounting policies
There were several new and amendments to standards and interpretations which are applicable for the first time for the Group from
1 April 2021. None of them have had a significant impact on the Group or Company’s income statement or balance sheet. In May
2021, the IASB published amendments to IAS 12 “Income Taxes”. The IASB issued “Deferred Tax related to Assets and Liabilities
arising from a Single Transaction”. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of
IAS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and
deductible temporary differences. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.
As earlier application is permitted the Group has adopted the amendments early as described in note 11.
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
Seenote 2(ab).
(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, 2008. The consolidated financial statements have been prepared on the
same basis asthe accounting policies set out in the Group’s annual financial statements for the year ended 31 March 2021, except
for the changes in accounting policies as shown in note 2(b). All forward-looking information is the responsibility of the Board of
Directors and has not been reviewed or reported on by the Group’s auditors.
(d) Going concern
The Group has prepared its going concern assessment for the period to the end of June 2023 (the “going concern period”).
TheGroup’s going concern assessment is based on a forecast of the Group’s future cash flows. This considers management’s
basecase scenario and a severe but plausible scenario where sensitivities are applied to model the outcome on the occurrence
ofdownside assumptions explained below. It considers the Group’s principal risks and uncertainties and is dependent on a number
of factors including financial performance, continued access to lending facilities (see note 24) and theability to continue to operate
the Group’s secured and unsecured debt structure within its financial covenants.
The severe but plausible scenario models a potential downturn in the Group’s performance, including the potential impact of
downsidemacro-factors such as the Ukrainian crisis and new Covid-19 variants, on the Group’s financial position and future
prospects. The cash flow projections incorporate assumptions on future trading performance and potential valuation movements
inorder to estimate the level of headroom on facilities and covenants for loan to value, debt service cover and occupancy ratios
setout within the relevant finance agreements.
The impact of the crisis in Ukraine and Covid-19 on the business in the year to 31 March 2022 did not result in any deterioration
inthe Group’s income streams or falls in asset values, both of which increased in the period.
The base case and severe but plausible downside scenarios include the following assumptions:
Base case:
» growth in rent roll at 31 March 2022, principally from contractual increases in rents and organic growth through lease renewals;
» increasing cost levels in line with forecast inflation of 7%;
» continuation of forecast capex investment;
» continuation of forecast dividend payments;
» payment of loan interest and loan amortisation amounts and assumed refinancing of the €15 million of the Schuldschein facility
inDecember 2022 and January 2023; and
» no acquisitions over and above those legally committed to.
Strategic report Governance Financial statements
131
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
2. Significant accounting policies continued
(d) Going concern continued
Severe but plausible downside scenario:
» reduction in occupancy of 5% per annum from the 31 March 2022 rent roll;
» reduction in service charge recovery of 5% per annum from the 31 March 2022 recovery levels; and
» reduction in property valuations of 5% per annum.
In the severe but plausible downside scenario, the Group is expected to comply with its loan covenants with no cure payments
orbreaches forecast, continue to operate within the terms of its facilities and have sufficient cash reserves.
The Directors also evaluated potential events and conditions beyond 30 June 2023 that may cast significant doubt on the Group’s
ability to continue as a going concern, specifically, the ability of the Group to refinance or extend the €20 million Schuldschein facility
inJuly 2023, €172 million Berlin Hyp AG loan in October 2023 and €58 million Deutsche Pfandbriefbank AG loan in December 2023.
TheDirectors are of the view that they have a realistic prospect of securing this refinancing or an alternative source of secured or
unsecured funding, a judgement which was informed by the Group’s financial forecasts, the Group’s track-record in previously
refinancing maturing debt (including the recent €300 million corporate bond issuance in November 2021) and the period of time
the Group has to arrange refinancing. Should the debt facilities falling due in July 2023, October 2023 and December 2023 not be
refinanced or extended, alternative options could be considered, including the use of mitigating factors referred to below. The
mitigating factors arewithin the control of the Directors and there is sufficient time for such mitigating factors to be implemented,
ifrequired.
In each of the scenarios considered for going concern, the Group is not dependent on any mitigating actions which would be
available to the Group in the going concern review period to June 2023, which include restricting dividends, reducing capital
expenditure or the disposal of unencumbered assets that have a book value of €1.6 billion as at 31 March 2022.
The Directors have not identified any material uncertainties which may cast significant doubt on the Group’s ability to continue as
agoing concern for the duration of the going concern period. After due consideration, the Board believes it is appropriate to adopt
the going concern basis in preparing the financial statements.
(e) Basis of consolidation
The consolidated financial information comprises the financial information of the Group as at 31 March 2022. The financial
information of the subsidiaries is prepared for the same reporting period as the Company, using consistent accounting policies.
All intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions are
eliminated in preparing the consolidated financial statements.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue
tobe consolidated until the date that such control ceases.
Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately
inthe consolidated income statement and the consolidated statement of comprehensive income and within equity in the
consolidated statement of financial position, separately from the Company’s shareholders’ equity.
(f) Acquisitions
Where a property is acquired through the acquisition of corporate interests, management considers the substance of the
assetsandactivities of the acquired entity in determining whether the acquisition represents the acquisition of a business.
The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to
theproperty (see policy in note 2(aa)). More specifically, consideration is made of the extent to which substantive processes are
acquired and, in particular, the extent of services provided by the subsidiary. IFRS 3 “Business Combinations” sets out an optional
concentration test designed to simplify the evaluation of whether an acquired set of activities and assets is not a business.
Anacquired set of activities and assets isnot a business if substantially all of the fair value of the gross assets acquired is
concentrated in a single identifiable asset or group of similar identifiable assets.
Where such acquisitions are not deemed to be an acquisition of a business, they are not treated as business combinations.
Instead,they are treated as asset acquisitions, with the cost to acquire the corporate entity being allocated between the identifiable
assets and liabilities of the entity based on their relative fair values on the acquisition date. Accordingly, no goodwill arises.
(g) Foreign currency translation
The consolidated financial information is presented in euros, which is the functional and presentational currency of the parent
company. For each entity, the Group determines the functional currency and items included in the financial statements of each
entity are measured using the functional currency.
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at
theexchange rate ruling at the statement of financial position date. All differences are taken to the statement of profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates
atthedates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using
theexchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in other comprehensive income (“OCI”) or profit or loss are also
recognised in OCI or profit or loss, respectively).
132
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
2. Significant accounting policies continued
(g) Foreign currency translation continued
On consolidation, the assets and liabilities of foreign operations are translated into euros at the rate of exchange prevailing at the
reporting date and their statements of profit or loss are translated at the exchange rates at the dates of the transactions, or where
appropriate, the average exchange rates for the period. The foreign exchange differences arising on translation for consolidation
arerecognised in other comprehensive income (“OCI”). On disposal of a foreign operation, the component of OCI relating to that
particular foreign operation is reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets
andliabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate
ofexchange at the reporting date.
(h) Revenue recognition
Rental income
Rental income from operating leases and licence agreements containing leases is recognised on a straight-line basis over the term
of the relevant lease unless another systematic basis is more representative of the time pattern in which the benefit derived from the
leased asset is diminished. Fixed or determinable rental increases, which can take the form of actual amounts or agreed percentages,
are recognised on a straight-line basis over the term of material leases. If the increases are related to a price index to cover
inflationary cost increases, then the policy is 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 is transferred to the customer at
anamount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.
The Group mainly generates revenue from contracts with customers for services rendered to tenants including management
charges and other expenses recoverable from tenants based on the Group’s right to recharge tenants for costs incurred
(withorwithout markup) on a day-to-day basis (“service charge income”). These services are specified in the lease agreements
andseparately invoiced. Service charge income is recognised as revenue when the performance obligations of the services
specified in the lease agreements are met.
The individual activities vary significantly throughout the day and from day to day; however, the nature of the overall promise of
providing property management service remains the same each day. Accordingly, the service performed each day is distinct and
substantially the same. These services represent a series of daily services that are individually satisfied over time because the
tenants simultaneously receive and consume the benefits provided by the Group. The actual service provided during each reporting
period is determined using cost incurred as the input method.
Transaction prices are regularly updated and are estimated at the beginning of each year based on previous costs and estimated
spend. Service charge budgets are prepared carefully to make sure that they are realistic and reasonable. Variable consideration is
only included in the transaction price to the extent it is highly probable that a significant reversal in the amount of cumulative revenue
recognised will not occur. Performance obligations related to service charge revenue is discharged by the Company continuously
and on a daily basis, through the provision of utilities and other services to tenants. Changes in service charge revenue are linked to
changes in the cost of fulfilling the obligation or the value to a tenant at a given period of time. Accordingly, the variable consideration
is allocated to each distinct period of service (i.e. each day) as it meets the variable consideration allocation exception criteria.
Service charge expenses are based on actual costs incurred and invoiced together with an estimate of costs to be invoiced in future
periods as receipt of final invoices from suppliers can take up to twelve months after the end of the financial period. The estimates
are based on expected consumption rates and historical trends and take into account market conditions at the time of recording.
Service charge income is based on service charge expense and takes into account recovery rates which are largely derived from
estimated occupancy levels. Service charge costs related to vacant space are irrecoverable.
The Group acts as a principal in relation to these services, and records revenue on a gross basis, as it controls the specified goods
orservices before transferring them to tenants.
Where amounts invoiced to tenants are greater than the revenue recognised at the period end date, the difference is recognised
asunearned revenue when the Group has unconditional right to consideration, even if the payments are non-refundable. Where
amounts invoiced are less than the revenue recognised at the period end date, the difference is recognised as contract assets or,
when the Group has a present right to payment, as receivables albeit unbilled.
Rental income, fee income and other income from managed properties
As the Group derives income and incurs expenses relating to properties it manages but does not own, such income and expense is
disclosed separately within revenue and direct costs. Income relating to managed properties is accounted for according to revenue
recognition accounting policies set out above.
Allocation of revenues earned through all-inclusive lease and licence arrangements
The Group has entered into leases and licensing arrangements (which contain a lease) where the revenue due from the tenant is
anall-inclusive price, representing lease income (recognised in accordance with IFRS 16) and service charge income (recognised
inaccordance with IFRS 15). Management have estimated the allocation of the revenues using the relevant service charge costs
incurred and the occupancy of the properties where all-inclusive lease and license arrangements are in place. The allocation resulted
in €5.7 million being recorded as service charge income.
Strategic report Governance Financial statements
133
Sirius Real Estate Limited Annual Report and Accounts 2022
2. Significant accounting policies continued
(h) Revenue recognition continued
Interest income
Interest income is recognised as it accrues (using the effective interest method, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial instrument).
(i) Leases
Group as lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as
operatingleases.
Group as lessee
All contracts that give the Group the right to control the use of an identified asset over a certain period of time in return for
consideration are considered leases within the meaning of IFRS 16 “Leases” (“IFRS 16”).
For all contracts that meet the definition of leases according to IFRS 16, the Group, at the commencement date of the lease (i.e. the
date the underlying asset is available for use), recognises lease liabilities equal to the present value of the future lease payments,
discounted to reflect the term-specific incremental borrowing rate if the interest rate implicit in the lease is not readily determinable.
Lease liabilities are subsequently increased by the periodic interest expenses and reduced by the lease payments made during the
financial year.
Correspondingly, right of use assets are initially recognised at cost under IFRS 16 which is the amount of the lease liabilities (plus any
advance payments that have already been made or any initial direct costs). Subsequently, the right of use assets are generally measured
at cost, taking depreciation (calculated straight line over the lease term) and impairments into account and are presented separately
in the statement of financial position except for right of use assets that meet the definition of IAS 40 “Investment Property” (“IAS 40”) which
are presented as investment property and subsequently measured at fair value in line with the measurement rules set out in IAS 40.
Periods resulting from extension or termination options granted on a unilateral basis are assessed on a case-by-case basis and are
only taken into account if their use is sufficiently probable.
The Group utilises the recognition exemptions provided by IFRS 16 and does not apply IFRS 16 to leases with a contractual term
oftwelve months or less or to leases in which the underlying asset is of low value (on a case-by-case basis).
Lease payments associated with short-term leases and with leases of low-value assets are recognised as expenses on a straight-line
basis over the lease term.
Right-of-use assets relating to office spaces are depreciated on a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets.
(j) Income tax
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 a 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 probable that taxable profit will be available against which the
deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply
intheyear when the related asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted
orsubstantively enacted at the reporting date.
The Group has converted the UK business into a UK Real Estate Investment Trust (“REIT”) with effect from 1 April 2022, with all
relevant steps for the REIT conversion taken prior to the accounting period end date of 31 March 2022, resulting in the Group no
longer being subject to UK corporation tax on income from its property rental business, as well as on profits on disposals of assets.
Accordingly, the Group reflected the impact of the conversion into a UK REIT as at 31 March 2022 and all deferred tax balances in
relation to the change in fair value of investment property, lease liabilities and right of use assets according to IFRS 16, losses and
other short term related deferred tax assets have been released as at 31 March 2022.
134
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
2. Significant accounting policies continued
(k) Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax except:
» where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case
thesales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
» receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables
inthe statement of financial position.
(l) Investment properties
Investment properties are properties that are either owned by the Group or held under a lease which are held for long-term rental
income and/or capital appreciation.
Investment properties owned by the Group are initially recognised at cost, including transaction costs when the control of the
property is transferred. Where recognition criteria are met, the carrying amount includes subsequent costs to add to or replace part
ofan investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market
conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the
income statement in the period in which they arise.
The fair value of the Group’s owned investment properties at 31 March 2022 is based on a valuation carried out at that date
byCushman & Wakefield LLP (2021: Cushman & Wakefield LLP), an independent valuer, on the basis of highest and best use.
Thevaluation is 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 Cushman & Wakefield LLP valuation is based upon assumptions including those relating to current rental rates, market rental
rates, occupancy, gross initial yields, discount factors and void periods. The German properties are valued on the basis of a ten to
fourteen year discounted cash flow model supported by comparable evidence. The discounted cash flow calculation is a valuation
of rental income considering non-recoverable costs and applying a discount rate for the current income risk over a ten to fourteen
year period. After ten to fourteen years, a determining residual value (exit scenario) is calculated, discounted to present value. The
UK properties are valued on a traditional basis, where the income being generated is capitalised by an appropriate yield. Yields are
based on comparable evidence of similar quality assets which have traded in the open market. The yield applied reflects the age,
location, ownership, customer base and agreement type.
Investment properties relating to leased assets are recognised in accordance with IFRS 16 (see policy in note 2(i)). Subsequent to
initial recognition, investment properties relating to leased assets are stated at fair value, which reflects market conditions at the
reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement
in the period in which they arise.
The fair value of investment properties relating to leased assets at 31 March 2022 has been arrived at on the basis of a valuation
carried out at that date by management. The valuation is based upon assumptions including future rental income and expenditure
inaccordance with the conditions of the related lease agreements. The properties are valued on the basis of a discounted cash flow
model with the measurement period equal to the term of the lease agreements.
(m) Disposals of investment property
Investment property disposals are recognised when control of the property transfers to the buyer, which typically occurs on the date
of completion. Profit or loss arising on disposal of investment properties is calculated by reference to the most recent carrying value
of the asset adjusted for subsequent capital expenditure.
(n) Assets held for sale and disposal groups
(i) Investment properties held for sale
Investment properties held for sale are separately disclosed at the asset’s fair value. In order for an investment property held for sale
to be recognised, the following conditions must be met:
» the asset must be available for immediate sale in its present condition and location;
» the asset is being actively marketed;
» the asset’s sale is expected to be completed within twelve months of classification as held for sale;
» there must be no expectation that the plan for selling the asset will be withdrawn or changed significantly; and
» the successful sale of the asset must be highly probable.
(ii) Disposal groups
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale
aremeasured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly
attributable to the disposal of a disposal group, excluding finance costs and income tax expense.
The criteria for held-for-sale classification is regarded as met only when the sale is highly probable and the disposal group is
available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely
thatsignificant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed
tothe plan to sell the asset with the sale expected to be completed within one year from the date of the classification.
Strategic report Governance Financial statements
135
Sirius Real Estate Limited Annual Report and Accounts 2022
2. Significant accounting policies continued
(n) Assets held for sale and disposal groups continued
(ii) Disposal groups continued
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately in the statement of financial position.
Additional disclosures are provided in note 15.
(o) Plant and equipment
Recognition and measurement
Items of plant and equipment are stated at 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 income statement 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 three to ten years
Fixtures and fittings three to fifteen years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
(p) Intangible assets
The Group recognises only acquired intangible assets. These intangibles are valued at cost.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets
arecarried at cost less any accumulated amortisation and accumulated impairment losses. Intangible assets with a definite useful
life are amortised on a straight-line basis over their respective useful lives. Their useful lives are between three and five years.
Anyamortisation of these assets is recognised as such under administrative expenses in the consolidated income statement.
Intangible assets with an indefinite useful life, including goodwill, are not amortised.
Goodwill arising on consolidation represents the excess of the cost of the purchase consideration over the Group’s interest in the fair
value of the identifiable assets and liabilities of a subsidiary at the date of acquisition.
Goodwill is initially recognised at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is
tested annually for impairment, or more frequently when there is an indication that the business to which the goodwill applies may
be impaired.
(q) Trade and other receivables
Rent and service charge receivables and any contract assets do not contain significant financing components and are measured
atthe transaction price. Other receivables are initially measured at fair value plus transaction costs. Subsequently, trade and other
receivables are measured at amortised cost and are subject to impairment (see note 2(y)). The Group applies the simplified
impairment model of IFRS 9 in order to determine expected credit losses in trade and other receivables, including lease incentives.
The Group assesses on a forward-looking basis the expected credit losses associated with its trade and other receivables.
Aprovision for impairment is made for the lifetime expected credit losses on initial recognition of the receivable. If collection
isexpected in more than one year, the balance is presented within non-current assets.
(r) Treasury Shares and shares issued to the Employee Benefit Trust
Own equity instruments are deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale,
issue or cancellation of the Group’s equity instruments.
(s) Share-based payments
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense,
withacorresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of
awards that meet the related service and non-market performance conditions at the vesting date.
(t) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits and other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to a known amount of cash and are subject to an
insignificant risk of change in value.
(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.
136
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
2. Significant accounting policies continued
(u) Bank borrowings continued
When debt refinancing exercises are carried out, existing liabilities will be treated as being extinguished when the new liability is
substantially different from the existing liability. In making this assessment, the Group will consider the transaction as a whole,
takinginto account both qualitative and quantitative characteristics in order to make the assessment.
(v) Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest
ratemethod.
(w) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
(x) Dividends
Interim dividend distributions to shareholders are recognised in the financial statements when paid. Final dividend distributions
tothe Company’s shareholders are recognised as a liability in the consolidated financial information in the period in which the
dividends are approved by the shareholders. The final dividend relating to the year ended 31 March 2022 will be approved and
recognised in the financial year ending 31 March 2023.
(y) Impairment excluding investment properties
(i) Financial assets
A financial asset (excluding financial assets at fair value through profit and loss) is assessed at each reporting date to determine
whether there is any impairment. The Group recognises an allowance for expected credit losses (“ECLs”) for all receivables and
contract assets held by the Group. ECLs are based on the difference between the contractual cash flows due in accordance with
thecontract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that
areintegral to the contractual terms and that are not recognised separately by the Group.
For rent and 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 macroeconomic environment in which our customers operate.
Impairment losses are recognised in the income statement. For more information refer to note 7. Trade and other receivables are
written off once all avenues to recover the balances are exhausted and the lease has ended.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than investment property, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.
Inassessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in the income statement. Impairment losses recognised in profit or loss in respect of
cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce
thecarrying amount of the other assets in the unit (or group of units) on a pro rata basis.
(z) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification, except
for deferred tax assets and liabilities which are classified as non-current assets and liabilities. An asset is current when it is:
» expected to be realised or intended to be sold or consumed in the normal operating cycle;
» held primarily for the purpose of trading;
» expected to be realised within twelve months after the reporting period; or
» cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the
reporting period.
All other assets are classified as non-current.
A liability is current when:
» it is expected to be settled in the normal operating cycle;
» it is held primarily for the purpose of trading;
» it is due to be settled within twelve months after the reporting period; or
» there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current.
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137
Sirius Real Estate Limited Annual Report and Accounts 2022
2. Significant accounting policies continued
(aa) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the
acquiree. Assets acquired and liabilities assumed (including contingent liabilities) are recognised at fair value. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share
of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.
The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive
process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is
critical to the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills,
knowledge or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is
considered unique or scarce or cannot be replaced without significant cost, effort or delay in the ability to continue producing outputs.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 “Financial Instruments”
ismeasured at fair value with the changes in fair value recognised in the statement of profit or loss in accordance with IFRS 9.
Othercontingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes
infair value recognised in profit or loss.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised
for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the
fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group reassesses whether it has
correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the
amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets
acquiredover the aggregate consideration transferred, then the gain is recognised in profit or loss (see policy in note 2(y)).
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the acquisition date, monitored at the lowest level within the entity
atwhich is monitored for internal management purposes (see policy in note 2(y)).
Where goodwill has been allocated to a cash-generating unit (“CGU”) and part of the operation within that unit is disposed of, the
goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain
orloss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation
and the portion of the CGU retained.
(ab) Standards and interpretations in issue and not yet effective
A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the Group.
The application of these new standards, amendments and interpretations is not expected to have a significant impact on the
Group’s income statement or balance sheet.
(ac) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings and EPRA net asset value metrics, which are widely used alternative metrics
to their IFRS equivalents (further details on EPRA best practice recommendations can be found at www.epra.com). Note 12 to the
financial statements includes a reconciliation of basic and diluted earnings to EPRA earnings. Note 13 to the financial statements
includes a reconciliation of net assets to EPRA net asset value metrics.
The Directors are required, as part of the JSE Listing Requirements, to disclose headline earnings; accordingly, headline earnings
arecalculated using basic earnings adjusted for revaluation gain net of related tax, gain/loss on sale of properties net of related tax,
recoveries from prior disposals of subsidiaries net of related tax, NCI relating to revaluation and revaluation gain/loss on investment
property relating to associates net of related tax. Note 12 to the financial statements includes a reconciliation between IFRS and
headline earnings.
The Directors have chosen to disclose adjusted earnings in order to provide an alternative indication of the Group’s underlying
business performance; accordingly, it excludes the effect of adjusting items net of related tax. Note 12 to the financial statements
includes a reconciliation of adjusting items included within adjusted earnings, with certain adjusting items stated within
administrative expenses in note 7 and certain finance costs in note 10.
The Directors have chosen to disclose adjusted profit before tax and funds from operations in order to provide an alternative
indication of the Group’s underlying business performance and to facilitate the calculation of its dividend pool; a reconciliation
between profit before tax and funds from operations is included within note 29 to the financial statements. Within adjusted profit
before tax are adjusting items as described above gross of related tax.
Further details on non-IFRS measures can be found in the business analysis section of this document.
138
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
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:
Acquisition and disposal of properties
Property transactions can be complex in nature and material to the financial statements. To determine when an acquisition or
disposal should be recognised, management considers whether the Group assumes or relinquishes control of the property, and the
point at which this is obtained or relinquished. Consideration is given to the terms of the acquisition or disposal contracts and any
conditions that must be satisfied before the contract is fulfilled. In the case of an acquisition, management must also consider
whether the transaction represents an asset acquisition or business combination.
On 15 November 2021 the Group acquired the BizSpace Group. A key judgment was made by Management as to whether the
acquisition represented a business combination or asset acquisition, concluding it represented a business combination. Refer
tonote 2aa above.
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:
Assessing goodwill for impairment (see also note 17)
Each year the Group considers cashflow forecasts from cash generating units in order to estimate whether an impairment provision
is required in respect of goodwill. In making this estimate, judgement is applied as to the extent to which the cash flow forecasts
prepared to assess value in use are distinguishable and separate from cash flows already considered in the carrying value of other
assets held by the group, such as investment property.
Goodwill arose during the year following the acquisition of Helix Investments Limited. Having performed the assessment of value in
use, the Group determined that the identified cash flows could not be distinguished from those included in other assets held by the
cash generating units, in particular those associated with the fair value of investment property. Consequently, the goodwill was
impaired during the year.
Historic goodwill was recognised in January 2012 following the internalisation of the Asset Management Agreement. Given the time
that has passed and performance and investment in the business since acquisition, the Group has determined that the identified
cash flows could no longer be distinguished from those included in other assets held by the cash generating units. Consequently,
the goodwill was impaired during the year.
Valuation of owned and leased investment properties (including those recognised within assets held for sale
oradisposal group)
The fair value of the Group’s owned investment properties was determined by Cushman & Wakefield LLP (2021: Cushman &
Wakefield LLP), an independent valuer. After adjusting investment properties for lease incentive accounting, the book value of
investment properties including assets held for sale is shown as €2,074.9 million (2021: €1,347.2 million) as disclosed in note 14.
The Cushman & Wakefield LLP valuation approach is explained in note 2(l).
The fair value of the Group’s leased investment properties was determined by the management. The book value of leased
investment properties is shown as €25.1 million (2021: €15.0 million) as disclosed in note 14.
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.
Cash flow and covenant compliance forecasts
Cash flow forecasts and covenant compliance forecasts are prepared by management to assess the going concern assumption
andviability of the Group. Estimations of future revenue and expenditure are made to determine the expected cash inflows and
outflows, considering expectations for occupancy levels, forecast expenditure and the current market climate. The impact of the
forecasted cash flows and underlying property valuations are considered when assessing forecast covenant compliance and
anticipated levels of headroom on the Group’s debt facilities.
Refer to note 2(d) for further details, which includes the assessment of forecasted cash flows and covenant compliance in
management’s going concern assessment.
Sustainability
In preparing the financial statements, management considered the impact of climate change, taking into account the relevant
disclosures in the Strategic Report, including those made in accordance with the recommendations of the Taskforce on Climate
related Financial Disclosure. The Group also considered the work performed to date in preparing its net zero pathway which it
plansto be in line with the Science Based Targets Initiative (SBTIs). At the time of preparing the financial statements, the Group
expects a limited exposure in relation to the investment properties, based on the current climate-related requirements. On this
basis,the Directors concluded that climate change did not have a material impact on the financial reporting judgements and
estimates, consistent with the assessment that this is not expected to have a significant impact on the Group’s going concern
orviability assessment.
Strategic report Governance Financial statements
139
Sirius Real Estate Limited Annual Report and Accounts 2022
4. Business combinations
The provisions of IFRS 3 are applied to all business combinations.
Acquisitions in 2022
Acquisition of Helix Investments Limited
Company
Type of
acquisition
Date of
acquisition
Acquired
voting rights
Helix Investments Limited, Jersey Purchase 15 Nov 2021 100%
The purchase price amounted to €242,779,000 (£206,763,000). The consideration was transferred in the form of cash. On completion
a loan advanced by the seller and held by Helix Investments Limited of €45,021,000 (£38,342,000) was also repaid in cash.
The Group incurred costs of €5,299,000 for legal advice and due diligence in connection with the business combination and these
are included in administrative expenses.
Helix Investments Limited is the holding company of the BizSpace Group business, which is a leading provider of regional flexible
workspace, offering light industrial, workshop, studio and out of town office units to a wide range of businesses across the UK. The
acquisition therefore provides Sirius with a unique opportunity to enter with immediate scale an under-served market via a one-step
acquisition of an established platform. It provides Sirius with a high-quality portfolio, offering significant organic growth potential in
rental pricing in a UK market characterized by supply constraints. The BizSpace Group business is also highly complementary to
Sirius’ existing platform, allowing for meaningful operational and financial synergies to drive value creation for Sirius shareholders.
The acquired identifiable assets and liabilities as at 15 November 2021 are presented at their fair values in the following table in
accordance with the final purchase price allocation:
Helix Investments
Limited
€000
Investment property 421,105
Other non-current assets 3,033
Current assets 3,478
Cash and cash equivalents 33,069
Loans (214,495)
Current liabilities (23,727)
Lease liabilities (12,182)
Deferred tax liabilities (4,670)
Net assets 205,611
Purchase price 242,779
Goodwill 37,168
Based on final purchase price allocation, goodwill arising on the purchase of Helix Investments Limited amounts to €37,168,000 as
at 15 November 2021. At 31 March 2022, the Directors assessed the computed goodwill to determine if it represented recoverable
value over and above the value included in the acquired investment properties and other net assets, and concluded that there was
insufficient evidence to support such recovery and so wrote-off the goodwill. As at 31 March 2022 the carrying amount of the
goodwill is €nil as it has been impaired as per note 17.
The gross amounts of acquired trade receivables and impairment losses recognized were as follows as at 15 November 2021.
Helix Investments
Limited
€000
Gross trade receivables 1,111
Expected credit loss provision (498)
Trade receivables 613
Due to first-time consolidation as at 15 November 2021, the acquired company has contributed revenue of €20,954,000 and profit
after tax of €47,891,000 to consolidated revenue and consolidated profit.
Had the company already been fully consolidated as at 1 April 2021, consolidated revenue and consolidated profit after tax would
have been as follows:
1 April 2021 to
31 March 2022
€000
Group revenue 243,879
Group profit after tax 211,060
140
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
5. Operating segments
Information on each operating segment based on geographical location in which the Group operates is provided to the chief
operating decision maker, namely the Group’s executive management team, on an aggregated basis and represented as operating
profit and expenses.
The investment properties that the Group owns are aggregated into segments with similar economic characteristics such as
thenature of the property, the products and services it provides, the customer type for the product served, and the method in
whichtheservices are provided. Executive management considers that this is best achieved through the operating segments
ofGerman assets and United Kingdom assets. The Group’s investment properties are considered to be their own segment.
Theproperties at each location (Germany and UK) have similar economic characteristics. These have been aggregated into
twooperating segments based on location in accordance with the requirements of IFRS 8.
Consequently, the Group is considered to have two reportable operating segments, as follows:
» Germany; and
» United Kingdom (“UK”).
Consolidated information by segment is provided on a net operating income basis, which includes revenues made up of gross rents
from third parties and direct expenses, gains and losses on property valuations, property disposals, and control of subsidiaries. All of
the Group’s share of profit of associates and administrative expenses including goodwill impairment, amortisation and depreciation
are separately disclosed as part of operating profit. Group administrative costs, finance income and expenses and change in fair
value of derivative financial instruments are disclosed.
Income taxes and depreciation are not reported to the executive management team on a segmented basis. There are no sales
between segments.
The operating segment UK is a result of a business combination as disclosed in note 4. As such the UK segment reportable figures
arethose from 15 November 2021 until 31 March 2022 whilst the Germany segment consists of the full annual period ended
31March 2022.
Year ended
31 March 2022
Year ended
31 March 2021
Germany
€000
UK
€000
Total
€000
Germany
€000
UK
€000
Total
€000
Rental and other income from
investment properties 108,716 15,258 123,974 95,288 — 95,288
Service charge income from
investment properties 55,009 5,696 60,705 51,041 — 51,041
Rental and other income from
managed properties 10,884 — 10,884 9,699 — 9,699
Service charge income from
managed properties 14,619 — 14,619 9,333 — 9,333
Revenue 189,228 20,954 210,182 165,361 — 165,361
Direct costs (80,118) (7,571) (87,689) (71,541) — (71,541)
Net operating income 109,110 13,383 122,493 93,820 — 93,820
Gain on revaluation of investment
properties 100,872 40,012 140,884 99,585 — 99,585
(Gain)/loss on disposal
ofproperties (363) (260) (623) 54 — 54
Recoveries from prior disposals
of subsidiaries 94 — 94 65 — 65
Depreciation and amortisation (2,685) (486) (3,171) (2,087) — (2,087)
Other administrative expenses (34,321) (3,226) (37,547) (25,736) — (25,736)
Goodwill impairment (3,738) (37,168) (40,906) — — —
Share of profit of associates 6,940 — 6,940 4,977 — 4,977
Operating profit 175,909 12,255 188,164 170,678 — 170,678
Finance income 2,986 — 2,986 2,712 — 2,712
Amortisation of capitalised
finance costs (2,544) (30) (2,574) (1,683) — (1,683)
Other finance expense (15,759) (4,886) (20,645) (8,186) — (8,186)
Change in fair value of derivative
financial instruments 996 — 996 136 — 136
Net finance costs (14,321) (4,916) (19,237) (7,021) — (7,021)
Segment profit for the year
before tax 161,588 7,339 168,927 163,657 — 163,657
Strategic report Governance Financial statements
141
Sirius Real Estate Limited Annual Report and Accounts 2022
5. Operating segments continued
31 March 2022 31 March 2021
Germany
€000
UK
€000
Total
€000
Germany
€000
UK
€000
Total
€000
Segment assets
Investment properties 1,635,221 464,783 2,100,004 1,362,192 — 1,362,192
Investment in associates 24,142 — 24,142 17,202 — 17,202
Other non-current assets 21,535 3,236 24,771 11,169 — 11,169
Total segment non-current
assets 1,680,898 468,019 2,148,917 1,390,563 — 1,390,563
6. Revenue
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Rental and other income from investment properties 123,974 95,288
Service charge income from investment properties 60,705 51,041
Rental and other income from managed properties 10,884 9,699
Service charge income from managed properties 14,619 9,333
Total revenue 210,182 165,361
Other income relates primarily to income associated with conferencing and catering of €2,977,000 (2021: €2,314,000) and fee
income from managed properties of €4,084,000 (2021: €7,338,000). The total revenue from contracts with customers includes
service charge income and other income totalling €63,682,000 from investment properties (2021: €53,355,000) and €18,703,000
from managed properties (2021: €16,671,000).
7. Operating profit
The following items have been charged in arriving at operating profit:
Direct costs
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Service charge costs relating to investment properties 66,128 56,184
Costs relating to managed properties 16,985 11,274
Non-recoverable maintenance 4,576 4,083
Direct costs 87,689 71,541
Administrative expenses
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Audit and non-audit fees to audit firm 1,426 683
Legal and professional fees 3,901 2,778
Expected credit loss provision (see note 25) 2,291 1,791
Other administration costs (328) 2,781
LTIP and SIP 4,173 3,395
Employee costs 16,004 11,109
Director fees and expenses 604 493
Depreciation of plant and equipment (see note 16) 1,167 669
Amortisation of intangible assets (see note 17) 1,164 897
Depreciation of right of use assets (see note 18) 843 521
Marketing 2,345 2,009
Selling costs relating to assets held for sale 20 —
Exceptional items 7,108 697
Administrative expenses 40,718 27,823
The expected credit loss provision has increased during the year mainly due to the increase of gross trade receivables as a result of
acquired assets in the financial year.
Other administration costs include net foreign exchange gains in amount of €1,975,000 as a result of the increased foreign currency
cash balances as at the period end.
Employee costs as stated above relate to costs which are not recovered through service charge.
142
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
7. Operating profit continued
Administrative expenses continued
Exceptional items relate to the following:
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Acquisition costs in relation to business combinations 5,299 —
Legal case costs 894 247
Office termination fees 500 —
Internal tax restructuring costs 415 250
Signage and hygiene costs related to Covid-19 — 200
Total 7,108 697
The following services have been provided by the Group’s auditors:
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Audit fees to audit firm:
Audit of consolidated financial statements 1,135 532
Audit of subsidiary undertakings 226 88
Total audit fees 1,361 620
Audit related assurance services 65 63
Other assurance services 234 —
Total assurance services 299 63
Total fees for non-audit services 299 63
Total fees 1,660 683
The other assurance services include services relating to the corporate bond issuances in amount of €234,000 which have been
capitalised to the loan issue costs.
8. Employee costs and numbers
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Wages and salaries 24,337 19,013
Social security costs 3,848 2,925
Pension 336 253
Other employment costs 335 71
Total 28,856 22,262
Included in the costs related to wages and salaries for the year are expenses of €4,173,000 (2021: €3,395,000) relating to the
granting or award of shares under LTIPs and SIPs (see note 9). The costs for all periods include those relating to Executive Directors.
All employees are employed directly by one of the following Group subsidiary companies: Sirius Facilities GmbH, Sirius Facilities
(UK) Limited, Curris Facilities & Utilities Management GmbH, SFG NOVA GmbH, Sirius Finance (Guernsey) Limited, BizSpace
Limited, BizSpace II Limited, M25 Business Centres Limited and Sirius Corporate Services B.V. The average number of people
employed by the Group during the year was 416 (2021: 256), expressed in full-time equivalents. In addition, as at 31 March 2022,
the Board of Directors consists of six Non-Executive Directors (2021: five) and three Executive Directors (2021: two).
9. Employee schemes
Equity-settled share-based payments
2018 LTIP
The LTIP for the benefit of the Executive Directors and the Senior Management Team was approved in 2018 with three separate
grant dates. Awards granted under the LTIP are made in the form of nil-cost options which vest after the three year performance
period with vested awards being subject to a further holding period of two years. Awards are split between ordinary and
outperformance awards. Ordinary awards carry both adjusted net asset value per share (“TNR”) (two-thirds of award) and relative
total shareholder return (“TSR”) (one-third of award) performance conditions and outperformance awards carry a sole TNR
performance condition. The employee’s tax obligation will be determined upon the vesting date of the share issue.
Strategic report Governance Financial statements
143
Sirius Real Estate Limited Annual Report and Accounts 2022
9. Employee schemes continued
Equity-settled share-based payments continued
June 2020 grant
3,600,000 ordinary share awards were granted under the scheme on 15 June 2020 with a total charge for the award of €2,265,552.
Charges for the awards are based on fair values calculated at the grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of the awards. For the 15 June 2020 LTIP grant an expense of
€811,000 is recognised in the consolidated income statement to 31 March 2022.
The following assumptions were used in calculating the fair value per share for the TNR and TSR elements of the award that were
granted on 15 June 2020:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date – € 0.84 0.84
Exercise price – € nil nil
Expected volatility – % 38.5 38.5
Performance projection period – years 2.79 2.67
Expected dividend yield – % 4.28 4.28
Risk-free rate based on European treasury bonds rate of return – % (0.677) p.a. (0.677) p.a.
Expected outcome of performance conditions – % 100 67.2
Fair value per share – € 0.745 0.564
The weighted average fair value of share options granted on 15 June 2020 is €0.68.
Assumptions considered in this model include: expected volatility of the Company’s share price, as determined by calculating the
historical volatility of the Company’s share price over the period immediately prior to the date of grant and commensurate with the
expected life of the awards; dividend yield based on the actual dividend yield as a percentage of the share price at the date of grant;
performance projection period; risk-free rate; and correlation between comparators.
June 2019 grant
3,760,000 ordinary share awards and 690,000 outperformance share awards were granted under the scheme on 16 June 2019 with
a total charge for the awards of €2,145,511 over three years. Charges for the awards are based on fair values calculated at the grant
date and expensed on a straight-line basis over the period that individuals are providing service to the Company in respect of the awards.
For the 16 June 2019 LTIP grant an expense of €1,126,000 is recognised in the consolidated income statement to 31 March 2022.
The fair value per share for the TNR and TSR elements of the award was determined using Black-Scholes and Monte-Carlo models
respectively with the following assumptions used in the calculation:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award/
outperformance award
1/3 ordinary award
Share price at grant date – € 0.73 0.73
Exercise price – € nil nil
Expected volatility – % 23.8 23.8
Performance projection period – years 2.80 2.67
Expected dividend yield – % 4.56 4.56
Risk-free rate based on European treasury bonds rate of return – % (0.695) p.a. (0.695) p.a.
Expected outcome of performance conditions – % 100/24.5 46.6
Fair value per share – € 0.643 0.340
The weighted average fair value of share options granted on 16 June 2019 is €0.54.
Assumptions considered in this model include: expected volatility of the Company’s share price, as determined by calculating the
historical volatility of the Company’s share price over the period immediately prior to the date of grant and commensurate with the
expected life of the awards; dividend yield based on the actual dividend yield as a percentage of the share price at the date of grant;
performance projection period; risk-free rate; and correlation between comparators.
January 2019 grant
In addition, as disclosed in the 2019 Annual Report, 4,000,000 ordinary share awards and 700,000 outperformance share awards
were previously granted under the scheme on 15 January 2019.
The January 2019 grant vested on 21 May 2021. Vesting was at maximum level for all participants resulting in the exercise of
3,266,210 shares with a weighted average share price of €1.20 at the date of exercise. 1,433,790 shares have been surrendered
inrelation to the partial settlement of certain participants’ tax liabilities arising in respect of the vesting. An amount of €1,944,000
was paid for the participants’ tax liabilities.
144
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
9. Employee schemes continued
Equity-settled share-based payments continued
2021 LTIP
The LTIP for the benefit of the Executive Directors and the Senior Management Team was approved in 2021. Awards granted
underthe LTIP are made in the form of nil-cost options which vest after the three year performance period with vested awards
beingsubject to a further restricted period of two years when shares acquired on exercise cannot be sold. Awards are subject
toadjusted net asset value per share (“TNR”) (two-thirds of award) and relative total shareholder return (“TSR”) (one-third of
award)performance conditions. The employees’ tax obligation will be determined upon the vesting date of the share issue.
August 2021 grant
4,154,119 ordinary share awards were granted under the scheme on 2 August 2021 with a total charge for the award of €4,705,196.
Charges for the awards are based on fair values calculated at the grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of the awards. For the 2 August 2021 LTIP grant an expense of
€1,066,000 is recognised in the consolidated income statement to 31 March 2022.
The following assumptions were used in calculating the fair value per share for the TNR and TSR elements of the award that were
granted on 2 August 2021:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date – € 1.39 1.39
Exercise price – € nil nil
Expected volatility – % 40.5 40.5
Expected life – years 2.91 2.91
Performance projection period – years 2.66 2.66
Expected dividend yield – % 2.79 2.79
Risk-free rate based on European treasury bonds rate of return – % (0.817) p.a. (0.817) p.a.
Fair value per share – € 1.28 * 0.84**
* In accordance with IFRS 2, TNR is classed as a non-market performance condition. As such, the fair value has been calculated using a Black-Scholes
model and does not take the expected outcome of the performance condition into account. The Company currently estimates the expected vesting
outcome for the TNR award to be 100%.
** In accordance with IFRS 2, relative TSR is classed as a market-based performance condition. As such, projected performance and the likelihood of
achieving the condition have been taken into account when calculating the fair value using a Monte-Carlo model. The model also uses assumptions
for the expected volatility of comparator companies, the pairwise correlation between comparator companies and TSR performance between the
start of the performance period and the date of grant.
The weighted average fair value of share options granted on 2 August 2021 is €1.13.
Expected volatility of the Company’s share price was determined by calculating the historical volatility of the Company’s share price
over the period immediately prior to the date of grant, commensurate with the term to the end of the performance period.
2019 SIP
A SIP for the benefit of senior employees of the Company was approved in August 2019. The fair value was based on the Company’s
estimate of the shares that will eventually vest. Under the SIP, the awards were granted in the form of whole shares at no cost to the
participants. Shares will vest after a three year performance period followed by a holding period of twelve months. The performance
conditions used to determine the vesting of the award were based on the adjusted net asset value including dividends paid. As a
result, under the scheme in August 2019 2,784,750 shares were granted (with an additional 70,000 allocated in the 2021 financial
year), subject to performance criteria, and an expense including related costs of €567,000 is recognised in the consolidated income
statement to 31 March 2022.
The SIP 2019 grant vested on 14 March 2022. Vesting was at maximum level for all participants resulting in the exercise of
2,534,750 shares with a weighted average share price of €1.45 at the date of exercise. 1,020,775 shares have been surrendered
inrelation to the partial settlement of certain participants’ tax liabilities arising in respect of the vesting. An amount of €1,500,000
was paid for the participants’ tax liabilities.
During the year 195,000 shares were forfeited due to employees in the scheme leaving the employment of the Company.
2020 SIP
Another SIP for the benefit of senior employees of the Company was approved in July 2020. The July 2020 grant vested on 21 May 2021.
Vesting was at maximum level for all participants resulting in the exercise of 95,537 shares with a weighted average share price of
€1.26 at the date of exercise. 24,463 shares have been surrendered in relation to the partial settlement of certain participants’ tax
liabilities arising in respect of the vesting. An amount of €75,000 was paid for the participants’ tax liabilities.
Strategic report Governance Financial statements
145
Sirius Real Estate Limited Annual Report and Accounts 2022
9. Employee schemes continued
Equity-settled share-based payments continued
2021 SIP
Another SIP for the benefit of the senior employees was approved in 2021. Awards granted under the SIP are made in the form
ofaconditional right to receive a specified number of shares for nil cost which vest after the three year performance period
(on1March 2025 for the 2021 award) with vested awards being subject to a further restricted period of one year when shares
cannot be sold. Awards are subject to adjusted net asset value per share (“TNR”) (two-thirds of award) and relative total shareholder
return (“TSR”) (one-third of award) performance conditions. Awards are equity settled. The employees’ tax obligation will be
determined upon the vesting date of the share issue.
September 2021 grant
3,074,500 share awards were granted under the scheme on 7 September 2021 with a total charge for the award of €3,735,689 on
the basis that 0% of awards are forfeited during the vesting period. Charges for the awards are based on fair values calculated at the
grant date and expensed on a straight-line basis over the period that individuals are providing service to the Company in respect of
the awards. For the 7 September 2021 SIP grant an expense of €603,000 is recognised in the consolidated income statement to
31March 2022.
The following assumptions were used in calculating the fair value per share for the TNR and TSR elements of the award that were
granted on 7 September 2021:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date – € 1.49 1.49
Exercise price – € n/a n/a
Expected volatility – % 40.7 40.7
Expected life – years 3.48 3.48
Performance projection period – years 2.56 2.56
Expected dividend yield – % 2.60 2.60
Risk-free rate based on European treasury bonds rate of return – % (0.737) p.a. (0.737) p.a.
Fair value per share – € 1.36 * 0.92**
* In accordance with IFRS 2, TNR is classed as a non-market performance condition. As such, the fair value has been calculated using a Black-Scholes
model and does not take the expected outcome of the performance condition into account. The Company currently estimates the expected vesting
outcome for the TNR award to be 100%.
** In accordance with IFRS 2, relative TSR is classed as a market-based performance condition. As such, projected performance and the likelihood of
achieving the condition have been taken into account when calculating the fair value using a Monte-Carlo model. The model also uses assumptions
for the expected volatility of comparator companies and the pairwise correlation between comparator companies and TSR performance between
the start of the performance period and the date of grant. Expected volatility of the Company’s share price was determined by calculating the
historical volatility of the Company’s share price over the period immediately prior to the date of grant, commensurate with the term to the end
ofthe performance period.
The weighted average fair value of share options granted on 7 September 2021 is €1.21.
Expected volatility of the Company’s share price was determined by calculating the historical volatility of the Company’s share
priceover the period immediately prior to the date of grant, commensurate with the term to the end of the performance period.
Movements in the number of awards outstanding are as follows:
Year ended
31 March 2022
Year ended
31 March 2021
Number of
share awards
Weighted
average
exercise
price
€000
Number of
share awards
Weighted
average
exercise
price
€000
Balance outstanding as at the beginning of the year
(nilexercisable) 15,584,750 — 11,934,750 —
Maximum granted during the year 7,302,831 — 3,790,000 —
Forfeited during the year (195,000) — (140,000) —
Exercised during the year (4,934,934) — — —
Shares surrendered to cover employee tax obligations (2,479,028) — — —
Balance outstanding as at year end (nil exercisable) 15,278,619 — 15,584,750 —
146
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
9. Employee schemes continued
Employee benefit schemes
A reconciliation of share-based payments and employee benefit schemes and their impact on the consolidated income statement
isas follows:
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Charge relating to 2018 LTIP – January 2019 grant — 1,202
Charge relating to 2018 LTIP – June 2019 grant 1,126 766
Charge relating to 2018 LTIP – June 2020 grant 811 645
Charge relating to 2021 LTIP – August 2021 grant 1,066 —
Charge relating to 2019 SIP – August 2019 grant 567 679
Charge relating to 2020 SIP – July 2020 grant — 103
Charge relating to 2021 SIP – September 2021 grant 603 —
Total consolidated income statement charge relating to LTIP and SIP 4,173 3,395
An amount of €1,945,000 is recognised in other distributable reserves as per the consolidated statement of changes in equity.
Ownshares held in amount of €1,868,000 have been used to settle the 2019 SIP award. In addition, an amount of €360,000
hasbeen accrued for future employers ‘tax obligations in relation to share based payment schemes.
10. Finance income, finance expense and change in fair value of derivative financial instruments
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Bank interest income 95 38
Finance income from associates 2,891 2,674
Finance income 2,986 2,712
Bank loan interest expense (11,482) (7,402)
Interest expense related to lease liabilities (see note 18) (479) (349)
Amortisation of capitalised finance costs (2,574) (1,683)
Total interest expense (14,535) (9,434)
Bank charges and bank interest expense on deposits (863) (435)
Refinancing costs, exit fees and prepayment penalties (7,821) —
Other finance costs (8,684) (435)
Finance expense (23,219) (9,869)
Change in fair value of derivative financial instruments 996 136
Net finance expense (19,237) (7,021)
Included within refinancing costs are exit fees and early prepayment penalties of €6,947,000 that directly related to the early
repayment of loans and cost in relation to the restructuring of debt in amount of €874,000.
The change in fair value of derivative financial instruments of €996,000 (2021: €136,000) reflects the change in the market valuation
of these financial instruments.
Strategic report Governance Financial statements
147
Sirius Real Estate Limited Annual Report and Accounts 2022
11. Taxation
Consolidated income statement
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Current income tax
Current income tax charge (6,220) (1,641)
Current income tax charge relating to disposals of investment properties — (87)
Adjustments in respect of prior periods 112 (189)
Total current income tax (6,108) (1,917)
Deferred tax
Relating to origination and reversal of temporary differences (14,827) (14,180)
Total deferred tax (14,827) (14,180)
Income tax charge reported in the income statement (20,935) (16,097)
The German corporation tax rate of 15.825% is used in the tax reconciliation for the Group. Taxation for other jurisdictions is
calculated at the rates prevailing in each jurisdiction.
The reconciliation of the effective tax rate is explained below:
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Profit before tax 168,927 163,657
Current tax using the German corporation tax rate of 15.825% (2021: 15.825%) 26,733 25,899
Effects of:
Deductible interest on internal financing
(1)
(5,398) (7,207)
Tax exempt gain from selling of investments and dividends
(2)
(1,113) (798)
Non-deductible expenses 452 290
Change in unrecognised deferred tax – tax effect of utilisation of tax losses not
previouslyrecognised
(3)
(10,478) (2,498)
Property valuation movements due to differences in accounting treatments — (210)
Adjustments in respect of prior periods (112) 189
German trade tax 19 236
Other — 196
Goodwill impairment
(4)
6,473 —
Difference in foreign tax rates
(5)
1,452 —
Deferred tax – current year movements
(6)
961 —
Rate difference between current tax and deferred tax
(7)
1,946 —
Total income tax charge in the income statement 20,935 16,097
(1) Amounts non-taxable on interest on internal financing have decreased from the prior year as a result of the financing company being tax resident in
Cyprus for the full period and taxed on a portion of its interest income, with the remainder not taxed at 15.825% being included in the reconciliation
above to show the difference in foreign tax rates.
(2) The tax exempt gain from selling of investments and dividends in the current year relates to the profits of associates only.
(3) Following the acquisition of the BizSpace Group on 15 November 2021, the BizSpace Group has entered into the UK REIT regime effective from
1April 2022. The result of the REIT conversion included the de-recognition of deferred tax assets and deferred tax liabilities on investment
properties, shown above in the reconciliation.
(4) An impairment of €40.9 million in relation to the goodwill is included as a permanent item in the tax reconciliation.
(5) As the current UK corporation tax rate is 19% this item shows the difference between this rate and the German corporation tax rate of 15.825%
used in the above reconciliation.
(6) The deferred tax only adjustment relates to movements in UK temporary differences on investment properties and lease liabilities which do not
impact the income statement or current taxes.
(7) As the substantively enacted UK main corporation tax rate effective from 1 April 2023 is currently 25%, the difference between the current
UKcorporation tax rate of 19% and the deferred tax rate of 25% (for deferred tax unwinding after 1 April 2023) is also included within the
taxreconciliation.
148
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
11. Taxation continued
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
31 March 2022 31 March 2021 31 March 2022 31 March 2021 31 March 2022 31 March 2021
€000 €000 €000 €000 €000 €000
Revaluation of investment
property — — (95,411) (73,946) (95,411) (73,946)
Rent free adjustments — — (640) (570) (640) (570)
Capitalised own works — — (55) (43) (55) (43)
Hedging (swaps) — 249 (52) — (52) 249
IFRS 16 4,059 — (4,283) — (224) —
Tax losses 20,330 17,979 — — 20,330 17,979
Fixed asset temporary differences 159 — — — 159 —
Deferred tax assets/(liabilities) 24,548 18,228 (100,441) (74,559) (75,893) (56,331)
In respect of IFRS 16, deferred tax had not previously been recognised due to the application of the initial recognition exemption.
Toalign with IASB ED/2019/5, which amends the application of the initial recognition exemption for transactions giving rise to
offsetting deferred tax assets and deferred tax liabilities, a deferred tax liability has been recognised on the IFRS 16 right of use asset
and a deferred tax asset in respect of the IFRS 16 lease liability resulting in a net deferred tax liability recognised as at 31 March 2022.
The amendments to the initial recognition exemption under IAS 12 are effective for accounting periods beginning on or after
1January 2023 and have been adopted early.
Movement in deferred tax during the year is as follows:
31 March 2021
Recognised
in income
Exchange
differences
Acquisition
of a subsidiary 31 March 2022
€000 €000 €000 €000 €000
Revaluation of investment property (73,946) (8,646) — (12,819) (95,411)
Rent free adjustments (570) (70) — — (640)
Capitalised own works (43) (12) — — (55)
Hedging (swaps) 249 (301) — — (52)
IFRS 16 — (5,697) — 5,473 (224)
Tax losses 17,979 2,272 (2) 81 20,330
Fixed asset temporary differences — (1,128) (32) 1,319 159
Other short-term temporary differences — (1,245) (31) 1,276 —
Total (56,331) (14,827) (65) (4,670) (75,893)
The Group has not recognised a deferred tax asset on €257 million (2021: €238 million) of tax losses carried forward and future
share scheme deductions due to uncertainties over recovery. There is no expiration date on €257 million of the losses and future
share scheme tax deductions will convert to tax losses on realisation.
Recognised and unrecognised temporary differences in the acquired BizSpace Group of €54 million, largely driven by deferred tax
liability on investment properties, has been derecognised as at 31 March 2022 following the BizSpace Group’s entry to the UK REIT
regime effective 1April2022 (see note 2(j) above for further discussion of this). A deferred tax asset of €0.2 million relating to the
excess of capital allowances over qualifying net book value in the BizSpace Group is expected to be recoverable by the residual
business of the BizSpace Group post REIT conversion. A change in ownership of the Group may result in restriction on the Group’s
ability to use taxlosses in certain tax jurisdictions.
A deferred tax liability is recognised on temporary differences of €nil (2021: €nil) relating to the unremitted earnings of overseas
subsidiaries as the Group is able to control the timing of the reversal of these temporary differences and it is probable that they will
not reverse in the foreseeable future. In his Budget Statement of 3 March 2021, the UK Chancellor announced that the main rate of
UK corporation tax would increase to 25% from 1 April 2023. This may have a potential impact on any taxable profits made by the
residual business of the BizSpace Group post REIT conversion and other UK operations only from that date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis. The following is the analysis of the deferred tax balances (after offset) for financial
reportingpurposes:
Strategic report Governance Financial statements
149
Sirius Real Estate Limited Annual Report and Accounts 2022
11. Taxation continued
Deferred tax assets and liabilities continued
31 March 2022
Assets Liabilities Net
€000 €000 €000
UK 159 — 159
Germany 24,389 (100,441) (76,052)
Cyprus — — —
Deferred tax assets/(liabilities) 24,548 (100,441) (75,893)
31 March 2022
Assets Liabilities Net
€000 €000 €000
UK — (7,316) (7,316)
Germany — (2,690) (2,690)
Cyprus — (417) (417)
Current tax assets/(liabilities) — (10,423) (10,423)
150
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
12. Earnings per share
The calculations of the basic, diluted, EPRA, headline and adjusted earnings per share are based on the following data:
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Earnings attributable to the owners of the Company
Basic earnings 147,873 147,451
Diluted earnings 147,873 147,451
EPRA earnings 70,695 58,633
Diluted EPRA earnings 70,695 58,633
Headline earnings 58,368 58,848
Diluted headline earnings 58,368 58,848
Adjusted
Basic earnings 147,873 147,451
Deduct gain on revaluation of investment properties (140,884) (99,585)
Add loss/(deduct gain) on sale of properties 623 (54)
Deduct recoveries from prior disposals of subsidiaries (94) (65)
Tax in relation to the gain on revaluation of investment properties and gain on sale
ofpropertiesabove less REIT related tax effects 14,624 14,346
Non-controlling interest (“NCI”) relating to revaluation, net of related tax 85 82
Goodwill impairment 40,906 —
Deduct revaluation gain on investment property relating to associates (6,021) (4,199)
Tax in relation to the revaluation gain on investment property relating to associates above 1,256 872
Headline earnings after tax 58,368 58,848
Deduct change in fair value of derivative financial instruments, net of related tax and NCI (793) (215)
Deduct revaluation expense relating to leased investment properties (5,572) (4,325)
Add adjusting items, net of related tax and NCI
(1)
19,122 4,092
Adjusted earnings after tax 71,125 58,400
Number of shares
Weighted average number of ordinary shares for the purpose of basic, headline, adjusted and basic
EPRA earnings per share
1,097,082,162
1,040,956,722
Weighted average number of ordinary shares for the purpose of diluted earnings, diluted headline
earnings, diluted adjusted earnings and diluted EPRA earnings per share
1,112,360,781
1,056,541,472
Basic earnings per share 13.48c 14.16c
Diluted earnings per share 13.29c 13.96c
Basic EPRA earnings per share 6.44c 5.63c
Diluted EPRA earnings per share 6.36c 5.55c
Headline earnings per share 5.32c 5.65c
Diluted headline earnings per share 5.25c 5.57c
Adjusted earnings per share 6.48c 5.61c
Adjusted diluted earnings per share 6.39c 5.53c
(1) See reconciliation between adjusting items as stated within earnings per share and those stated within administrative expenses in note 7.
Strategic report Governance Financial statements
151
Sirius Real Estate Limited Annual Report and Accounts 2022
12. Earnings per share continued
Notes
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Exceptional items 7 7,108 697
Refinancing costs, exit fees and prepayment penalties 10 7,821 —
Selling costs relating to assets held for sale 7 20 —
LTIP and SIP 7 4,173 3,395
Adjusting items as per note 12 19,122 4,092
The following table shows the reconciliation of basic to headline earnings, separately disclosing the impact before tax (gross
column) and after tax (net column):
Year ended
31 March 2022
Year ended
31 March 2021
Gross
€000
Net
€000
Gross
€000
Net
€000
Basic earnings 147,873 147,451
Deduct gain on revaluation of investment properties (140,884) (126,260) (99,585) (85,326)
Add loss on sale of properties 623 623 (54) 33
Deduct recoveries from prior disposals of subsidiaries (94) (94) (65) (65)
NCI relating to revaluation 104 85 101 82
Goodwill impairment 40,906 40,906 — —
Deduct revaluation gain on investment property relating
toassociates (6,021) (4,765) (4,199) (3,327)
Headline earnings 58,368 58,848
EPRA earnings
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Basic and diluted earnings attributable to owners of the Company 147,873 147,451
Gain on revaluation of investment properties (140,884) (99,585)
Add loss on disposal of properties (including tax) 623 33
Deduct recoveries from prior disposals of subsidiaries (94) (65)
Refinancing costs, exit fees and prepayment penalties 7,821 —
Goodwill impairment 40,906 —
Acquisition costs in relation to business combinations 5,299 —
Change in fair value of derivative financial instruments (996) (136)
Deferred tax in respect of EPRA earnings adjustments 14,827 14,180
NCI in respect of the above 85 82
Deduct revaluation gain on investment property relating to associates (6,021) (4,199)
Tax in relation to the revaluation gain on investment property relating to associates 1,256 872
EPRA earnings 70,695 58,633
For more information on EPRA earnings refer to Annex 1.
For the calculation of basic, headline, adjusted, EPRA and diluted earnings per share the number of shares has been reduced by
5,280,308 own shares held (2021: 3,684,608 shares), which are held by an Employee Benefit Trust on behalf of the Group.
The weighted average number of shares for the purpose of diluted, diluted EPRA, diluted headline and adjusted diluted earnings
per share is calculated as follows:
Year ended
31 March 2022
Year ended
31 March 2021
Weighted average number of ordinary shares for the purpose of basic, basic EPRA, headline
andadjusted earnings per share 1,097,082,162 1,040,956,722
Effect of grant of SIP shares 3,074,500 2,834,750
Effect of grant of LTIP shares 12,204,119 12,750,000
Weighted average number of ordinary shares for the purpose of diluted, diluted EPRA,
diluted headline and adjusted diluted earnings per share 1,112,360,781 1,056,541,472
152
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
12. Earnings per share continued
EPRA earnings continued
The Company has chosen to report EPRA earnings per share (“EPRA EPS”). EPRA EPS is a definition of earnings as set out by the
European Public Real Estate Association. EPRA earnings represents earnings after adjusting for the revaluation of investment
properties, changes in fair value ofderivative financial instruments, gains and losses on disposals of properties (net of related tax),
recoveries from prior disposals of subsidiaries (net of related tax), refinancing costs, exit fees and prepayment penalties (collectively
the “EPRA earnings adjustments”), deferred tax in respect of the EPRA earnings adjustments, NCI relating to gain on revaluation and
gain on sale ofproperties net of related tax, revaluation gain on investment property relating to associates and the related tax thereon.
13. Net asset value per share
31 March 2022
€000
31 March 2021
€000
Net asset value
Net asset value for the purpose of assets per share (assets attributable to the owners of the Company) 1,190,652 926,533
Deferred tax liabilities/(assets) (see note 11) 75,893 56,331
Derivative financial instruments at fair value (329) 1,141
Adjusted net asset value attributable to the owners of the Company 1,266,216 984,005
Number of shares
Number of ordinary shares for the purpose of net asset value per share and adjusted net asset
value per share
1,166,880,684
1,049,132,259
Number of ordinary shares for the purpose of EPRA NTA per share
1,182,159,303
1,064,717,009
Net asset value per share 102.04c 88.31c
Adjusted net asset value per share 108.51c 93.79c
EPRA NTA per share 107.28c 92.29c
Net asset value as at year end (basic) 1,190,652 926,533
Derivative financial instruments at fair value (329) 1,141
Deferred tax in respect of EPRA earnings adjustments 75,566 56,331
Goodwill as per note 17 — (3,738)
Intangibles as per note 17 (4,283) (2,830)
Deferred tax in respect of EPRA adjustments in relation to investment in associates 6,563 5,212
EPRA NTA 1,268,169 982,649
31 March 2022
EPRA NRV
€000
EPRA NTA
€000
EPRA NDV
€000
Net asset value as at year end (basic) 1,190,652 1,190,652 1,190,652
Diluted EPRA net asset value at fair value 1,190,652 1,190,652 1,190,652
Group
Derivative financial instruments at fair value (329) (329) n/a
Deferred tax in respect of EPRA earnings adjustments 75,893 75,566 * n/a
Goodwill as per note 17 n/a — —
Intangibles as per note 17 n/a (4,283) n/a
Fair value of fixed interest rate debt n/a n/a (22,229)
Real estate transfer tax 160,692 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments 6,563 6,563 * n/a
Fair value of fixed interest rate debt n/a n/a 2,196
Real estate transfer tax 9,147 n/a n/a
Total EPRA NRV, NTA and NDV 1,442,618 1,268,169 1,170,619
EPRA NRV, NTA and NDV per share 122.03c 107.28c 99.02c
Strategic report Governance Financial statements
153
Sirius Real Estate Limited Annual Report and Accounts 2022
13. Net asset value per share continued
31 March 2021
EPRA NRV
€000
EPRA NTA
€000
EPRA NDV
€000
Net asset value as at year end (basic) 926,533 926,533 926,533
Diluted EPRA net asset value at fair value 926,533 926,533 926,533
Group
Derivative financial instruments at fair value 1,141 1,141 n/a
Deferred tax in respect of EPRA earnings adjustments 56,331 56,331 * n/a
Goodwill as per note 17 n/a (3,738) (3,738)
Intangibles as per note 17 n/a (2,830) n/a
Fair value of fixed interest rate debt n/a n/a (3,485)
Real estate transfer tax 106,274 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments 5,212 5,212 * n/a
Fair value of fixed interest rate debt n/a n/a (1,772)
Real estate transfer tax 6,772 n/a n/a
Total EPRA NRV, NTA and NDV 1,102,263 982,649 917,538
EPRA NRV, NTA and NDV per share 103.53c 92.29c 86.18c
* The Company intends to hold and does not intend in the long term to sell any of the investment properties and has excluded such deferred taxes
for the whole portfolio as at year end except for deferred tax in relation to assets held for sale.
For more information on adjusted net asset value and EPRA NRV, NTA and NDV, refer to Annex 1.
The number of ordinary shares for the purpose of EPRA NRV, NTA and NDV per share is calculated as follows:
31 March 2022 31 March 2021
Number of ordinary shares for the purpose of net asset value per share and adjusted net asset
value per share 1,166,880,684 1,049,132,259
Effect of grant of SIP shares 3,074,500 2,834,750
Effect of grant of LTIP shares 12,204,119 12,750,000
Number of ordinary shares for the purpose of EPRA NRV, NTA and NDV per share 1,182,159,303 1,064,717,009
The number of shares has been reduced by 5,280,308 own shares held (2021: 3,684,608 shares), which are held by an Employee
Benefit Trust on behalf of the Group.
14. Investment properties
The movement in the book value of investment properties is as follows:
31 March 2022
€000
31 March 2021
€000
Total investment properties at book value as at the beginning of the year 1,362,192 1,193,915
Acquisition of a subsidiary (see note 4)* 421,105 —
Additions – owned investment properties 162,844 35,484
Additions – leased investment properties 3,366 1,518
Capital expenditure and broker fees 22,607 31,720
Disposals (1,808) (30)
Reclassified as investment properties held for sale (see note 15) (13,739) —
Gain on revaluation above capex and broker fees 147,017 104,156
Adjustment in respect of lease incentives (561) (246)
Deficit on revaluation relating to leased investment properties (5,572) (4,325)
Foreign exchange differences 2,553 —
Total investment properties at book value as at year end
(1)
2,100,004 1,362,192
* An amount of €12,182,000 relate to leased investment properties.
154
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
14. Investment properties continued
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:
31 March 2022
€000
31 March 2021
€000
Owned investment properties at market value per valuer’s report
(1)
2,079,079 1,350,770
Adjustment in respect of lease incentives (4,153) (3,603)
Leased investment property market value 25,078 15,025
Total investment properties at book value as at year end
(1)
2,100,004 1,362,192
(1) Excluding assets held for sale.
The fair value (market value) of the Group’s owned investment properties as at year end has been arrived at on the basis of a valuation
carried out at that date by Cushman & Wakefield LLP (2021: Cushman & Wakefield LLP), an independent valuer accredited in terms
of the RICS. The fee arrangement with Cushman & Wakefield LLP for the valuation of the Group’s properties is fixed, subject to an
adjustment for acquisitions and disposals.
The value of each of the properties has been assessed in accordance with the RICS valuation standards on the basis of market value.
The methodology and assumptions used to determine the fair values of the properties are consistent with the previous year.
The weighted average lease expiry remaining across the owned portfolio in Germany as at year end was 2.9 years (2021: 2.9 years).
The weighted average lease expiry remaining across the owned portfolio in the UK as at year end was 0.9 years. Licence agreements
in the UK are rolling and are included in the valuation.
The fair value (market value) of the Group’s leased investment properties as at year end has been arrived at on the basis of a
valuation carried out by management using discounted cash flows similar to the approach of Cushman & Wakefield LLP.
The reconciliation of gain on revaluation above capex as per the income statement is as follows:
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Gain on revaluation above capex and broker fees 147,017 104,156
Adjustment in respect of lease incentives (561) (246)
Deficit on revaluation relating to leased investment properties (5,572) (4,325)
Gain on revaluation of investment properties reported in the income statement 140,884 99,585
Included in the gain on revaluation of investment properties reported in the income statement (excluding the revaluation effects in
respect of leased investment properties) are gross gains of €160.4 million and gross losses of €19.5 million (2021: gross gains of
€106.4 million and gross losses of €6.8 million).
Other than the capital commitments disclosed in note 31, the Group is under no contractual obligation to purchase, construct or
develop any investment property. The Group is responsible for routine maintenance of the investment properties.
All investment properties are categorised as Level 3 fair values as they use significant unobservable inputs. There have not been any
transfers between levels during the year. Investment properties have been classed according to their asset type. Information on
these significant unobservable inputs per class of investment property is disclosed below (excluding leased investment properties).
The valuation for owned investment properties is (including assets classified as held for sale) performed on a lease-by-lease basis
due to the mixed-use nature of the sites using the discounted cash flow technique for the German portfolio and on a capitalised
income basis, where income is capitalised by an appropriate yield which reflects the age, location, ownership, customer base and
agreement type for the UK portfolio. This gives rise to large ranges in the inputs.
Strategic report Governance Financial statements
155
Sirius Real Estate Limited Annual Report and Accounts 2022
14. Investment properties continued
Market
value
(€000)
Current rental rate
per sqm
€
Market rental rate
per sqm
€
Occupancy
%
Gross initial
yield
%
Net initial yield
%
Discount factor
%
Void period
months
31 March 2022 Low High Low High Low High Low High Low High Low High Low High
Traditional
businessparks
Mature 329,100 2.67 8.32 2.65 7.42 91.5 100.0 4.5 8.5 3.7 6.7 3.6 5.4 6 12
Value add 625,540 —* 8.16 3.49 8.46 —* 97.3 —* 9.0 (3.7) 6.8 3.9 7.1 9 18
Total traditional
business parks 954,640 —* 8.32 2.65 8.46 —* 100.0 —* 9.0 (3.7) 6.8 3.6 7.1 6 18
Modern
businessparks
Mature 195,750 5.03 8.13 3.74 7.68 91.8 100.0 5.0 9.8 4.1 8.4 3.6 5.0 6 15
Value add 213,140 2.86 10.28 3.76 10.15 74.9 97.8 2.9 9.4 1.6 6.6 4.4 7.3 9 24
Total modern
business parks 408,890 2.86 10.28 3.74 10.15 74.9 100.0 2.9 9.8 1.6 8.4 3.6 7.3 6 24
Office
Mature 10,200 10.07 10.07 9.38 9.38 87.1 87.1 6.4 6.4 5.2 5.2 4.5 4.5 9 9
Value add 266,880 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 —* 7.2 4.6 6.6 9 18
Total office 277,080 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 —* 7.2 4.5 6.6 9 18
Total Germany 1,640,610 —* 11.78 2.65 12.18 —* 100.0 —* 9.8 (3.7) 8.4 3.6 7.3 6 24
Market
value
(€000)
Average current
rental rate
per sqm
€
Average market rental
rate
per sqm
€
Occupancy
%
Net initial yield
%
Void period
months
31 March 2022 Low High Low High Low High Low High Low High
Total mixed-
useschemes 123,263 1.71 26.49 5.78 23.59 48.6 96.8 3.0 10.0 4.00 12.00
Total office 153,112 — * 25.38 5.83 26.50 —* 100.0 —* 10.0 4.00 12.00
Total industrial 175,394 1.04 10.94 2.39 11.24 65.1 100.0 3.0 10.0 4.00 12.00
Total UK 451,769 —* 26.49 2.39 26.50 —* 100.0 —* 10.0 4.00 12.00
* The Group has acquired vacant investment properties during the financial year. As a result the lower range for rental rates, occupancy and yields is 0.
Market
value
(€000)
Current rental rate
per sqm
€
Market rental rate
per sqm
€
Occupancy
%
Gross initial
yield
%
Net initial yield
%
Discount factor
%
Void period
months
31 March 2021 Low High Low High Low High Low High Low High Low High Low High
Traditional
businessparks
Mature 326,650 2.67 8.16 2.65 8.46 91.3 100.0 4.7 8.8 3.8 7.2 3.8 5.9 6 12
Value add 439,100 1.99 6.44 3.33 6.91 49.5 97.3 4.7 9.3 3.4 7.2 4.3 7.4 9 18
Total traditional
business parks 765,750 1.99 8.16 2.65 8.46 49.5 100.0 4.7 9.3 3.4 7.2 3.8 7.4 6 18
Modern
businessparks
Mature 209,600 4.78 10.01 3.63 9.79 91.6 100.0 5.4 10.0 4.5 8.6 3.8 5.4 6 15
Value add 144,400 3.61 7.09 4.35 8.24 77.2 88.2 5.9 8.6 4.7 7.1 5.0 5.9 9 24
Total modern
business parks 354,000 3.61 10.01 3.63 9.79 77.2 100.0 5.4 10.0 4.5 8.6 3.8 5.9 6 24
Office
Mature 17,080 7.81 9.70 9.19 9.21 91.6 94.0 4.7 6.9 3.6 5.8 4.6 4.8 9 9
Value add 213,940 3.93 11.35 6.02 10.30 57.9 99.5 2.6 10.4 0.7 8.3 4.9 6.9 9 15
Total office 231,020 3.93 11.35 6.02 10.30 57.9 99.5 2.6 10.4 0.7 8.3 4.6 6.9 9 15
Total Germany 1,350,770 1.99 11.35 2.65 10.30 49.5 100.0 2.6 10.4 0.7 8.6 3.8 7.4 6 24
156
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
14. Investment properties continued
As a result of the level of judgement and estimates used in arriving at the market valuations, the amounts which may ultimately be
realised in respect of any given property may differ from valuations shown in the statement of financial position. Key inputs are
considered to be inter-related whereby changes in one key input can result in changes in other key inputs. The impact of changes
inrelation to the key inputs is also shown in the table below:
Market
value
€000
Change of 5%
in market rental rates
€000
Change of 0.25%
in discount rates
€000
Change of 0.5%
in gross initial yield
€000
Change of 0.5%
in net initial yield
€000
31 March 2022 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Total traditional
business parks 954,640 48,450 (48,380) (19,640) 20,070 (84,224) 82,247 (98,020) 126,295
Total modern
business parks 408,890 19,260 (19,420) (8,540) 8,510 (30,840) 36,820 (38,033) 48,091
Total office 277,080 14,470 (14,340) (5,840) 5,760 (23,005) 28,467 (37,901) 27,766
Market value
Germany 1,640,610 82,180 (82,140) (34,020) 34,340 (138,069) 147,534 (173,954) 202,152
Market
value
€000
Change of 5%
in market rental rates
€000
Change of 0.5%
in net initial yield
€000
31 March 2022 Increase Decrease Increase Decrease
Total mixed-use schemes 123,263 3,967 (4,423) (4,494) 4,389
Total office 153,112 5,75 4 (5,325) (4,295) 5,029
Total industrial 175,394 7,139 (6,333) (5,822) 6,843
Market value UK 451,769 16,860 (16,081) (14,611) 16,261
Market
value
€000
Change of 5%
in market rental rates
€000
Change of 0.25%
in discount rates
€000
Change of 0.5%
in gross initial yield
€000
Change of 0.5%
in net initial yield
€000
31 March 2021 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Total traditional
business parks 765,750 38,310 (38,000) (15,030) 15,950 (58,824) 69,947 (74,243) 93,306
Total modern
business parks 354,000 17,350 (17,190) (7,560) 7,960 (24,479) 28,561 (29,189) 35,288
Total office 231,020 11,680 (11,480) (4,520) 4,850 (18,859) 23,308 (26,769) 53,359
Market value
Germany 1,350,770 67,340 (66,670) (27,110) 28,760 (102,162) 121,816 (130,201) 181,953
15. Assets held for sale
Investment properties held for sale
31 March 2022
€000
31 March 2021
€000
Magdeburg 13,750 —
Balance as at year end 13,750 —
The disclosures regarding valuation in note 14 are also applicable to assets held for sale. An amount of €13,750,000 relating to
thesale of the Magdeburg asset was received prior to the completion date of 1 April 2022 and is included in the cash at bank per
note 22. As a result, an equal and opposite position within other payables was recognised. See note 23 for further details.
Strategic report Governance Financial statements
157
Sirius Real Estate Limited Annual Report and Accounts 2022
16. Plant and equipment
Plant and
equipment
€000
Fixtures
and fittings
€000
Total
€000
Cost
As at 31 March 2021 1,035 6,052 7,087
Acquisition of a subsidiary (see note 4) 727 1,826 2,553
Additions in year 889 519 1,408
Disposals in year — (3) (3)
Foreign exchange differences 13 22 35
As at 31 March 2022 2,664 8,416 11,080
Depreciation
As at 31 March 2021 (691) (3,714) (4,405)
Charge for year (389) (778) (1,167)
Disposals in year — 3 3
Foreign exchange differences (8) (11) (19)
As at 31 March 2022 (1,088) (4,500) (5,588)
Net book value as at 31 March 2022 1,576 3,916 5,492
Cost
As at 31 March 2020 716 5,394 6,110
Additions in year 319 658 977
Disposals in year — — —
As at 31 March 2021 1,035 6,052 7,087
Depreciation
As at 31 March 2020 (615) (3,121) (3,736)
Charge for year (76) (593) (669)
Disposals in year — — —
As at 31 March 2021 (691) (3,714) (4,405)
Net book value as at 31 March 2021 344 2,338 2,682
158
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
17. Intangible assets
Software and
licences with
definite useful life
€000
Goodwill
€000
Total
€000
Cost
As at 31 March 2021 7,848 3,738 11,586
Acquisition of a subsidiary (see note 4) 480 37,168 37,648
Additions in year 2,132 — 2,132
Disposals in year — — —
Foreign exchange differences 5 — 5
As at 31 March 2022 10,465 40,906 51,371
Amortisation
As at 31 March 2021 (5,018) — (5,018)
Charge for year (1,164) — (1,164)
Disposals in year — — —
Impairment — (40,906) (40,906)
Foreign exchange differences — — —
As at 31 March 2022 (6,182) (40,906) (47,088)
Net book value as at 31 March 2022* 4,283 — 4,283
Cost
As at 31 March 2020 6,107 3,738 9,845
Additions in year 1,741 — 1,741
Disposals in year — — —
As at 31 March 2021 7,848 3,738 11,586
Amortisation
As at 31 March 2020 (4,121) — (4,121)
Charge for year (897) — (897)
Disposals in year — — —
As at 31 March 2021 (5,018) — (5,018)
Net book value as at 31 March 2021* 2,830 3,738 6,568
* Included in the net book value is an amount of €2,393,000 relating to intangible assets under development not yet amortised (2021: €1,600,000).
All these development projects are expected to finalise in the next financial year.
Internalisation of Asset Management Agreement
On 30 January 2012, a transaction was completed to internalize the Asset Management Agreement and, as a result of the
consideration given exceeding the net assets acquired, goodwill of €3,738,000 was recognized. The goodwill is allocated to the
cash-generating units comprising the Germany segment.
As explained in note 3, in the year ended 31 March 2022 indicators of impairment relating to the goodwill balance were noted as the
Group has determined that the identified cash flows could no longer be distinguished from those included in other assets held by
the cash generating units in the Germany segment. This resulted in the entirety of the balance being impaired and a consequent
impairment loss of €3,738,000 being recognized. Goodwill which has been impaired may not be reversed in future periods.
Helix Investment Limited
On 15 November 2021, the business combination described in note 4 resulted in the recognition of goodwill due to the
consideration given exceeding the net assets required by €37,168,000. The goodwill balance was allocated to the cash-generating
units comprising the UK segment and an impairment test was performed at 31 March 2022 to determine whether the recoverable
amount of the cash-generating units exceed the carrying value. The key assumptions regarding value in use were three-year cash
flow forecasts as prepared by management of the group of cash-generating units and the discount rate applied. Cash flows beyond
three years are extrapolated using an inflation figure of 2%. The discount rate used is a pre-tax rate and reflects the risks specific to
the real estate industry in the UK. A discount rate of 7.13% and terminal value of 5.13% were applied in the impairment review.
In the period since acquisition, the properties held by BizSpace and the rent roll of the UK segment have increased in value
significantly. The Group has considered these factors along with the value in use calculation in assessing whether the goodwill is
recoverable and has concluded that it is not. Whilst the Group’s longer term plans for the business and the potential synergies with
the broader Group are at an early stage, based on the impairment review conducted the Group has concluded that there is not
sufficient evidence to support the goodwill balance over and above the cash flows already included in the assessment of the fair
value of investment properties and other assets held by the Group. As a result, an impairment loss of €37,168,000 was recognized
for the year ended 31 March 2022. Goodwill which has been impaired may not be reversed in future periods.
Strategic report Governance Financial statements
159
Sirius Real Estate Limited Annual Report and Accounts 2022
18. Right of use assets and lease liabilities
Set out below are the carrying amounts of right of use assets (excluding those disclosed under investment properties) recognised
and the movements during the year:
Office
€000
Total
€000
As at 31 March 2020 2,440 2,440
Additions — —
Depreciation expense (521) (521)
As at 31 March 2021 1,919 1,919
Additions 15,047 15,047
Depreciation expense (843) (843)
Lease modifications* (1,127) (1,127)
As at 31 March 2022 14,996 14,996
* Lease modifications relate to the early termination of the head office lease.
In addition to office spaces the Group is also counterparty to long-term leasehold agreements and head leases relating to commercial
property. Right of use assets amounting to €25,078,000 (2021: €15,025,000) are classified as investment properties, of which
€3,979,000 (2021: €9,355,000) relate to commercial property.
Set out below are the carrying amounts of lease liabilities and the movements during the year:
31 March 2022
€000
31 March 2021
€000
Balance as at the beginning of the year (14,987) (19,150)
Acquisition of a subsidiary (see note 4) (12,182) —
Accretion of interest (479) (349)
Additions (18,413) (1,518)
Lease modifications 1,127 —
Payments 6,350 6,030
Foreign exchange differences (77) —
Balance as at year end (38,661) (14,987)
Current lease liabilities as at year end (1,090) (5,857)
Non-current lease liabilities as at year end (37,571) (9,130)
The following table sets out the carrying amount, by maturity, of the Group’s lease liabilities:
31 March 2022
Within 1 year
€000
1–5 years
€000
5+ years
€000
Total
€000
Commercial property* (667) (945) (528) (2,140)
Long-term leasehold* (239) (1,013) (19,848) (21,100)
Office space (184) (6,197) (9,040) (15,421)
Total (1,090) (8,155) (29,416) (38,661)
31 March 2021
Within 1 year
€000
1–5 years
€000
5+ years
€000
Total
€000
Commercial property* (5,208) (1,364) (776) (7,348)
Long-term leasehold* (133) (560) (4,977) (5,670)
Office space (516) (1,453) — (1,969)
Total (5,857) (3,377) (5,753) (14,987)
* These lease liabilities relate to right of use assets recorded as investment properties.
Maturity analysis of lease liabilities using contractual undiscounted payments is disclosed in note 25.
The overall weighted average discount rate used for the year is 2.3% (2021: 1.9%).
During the year expenses paid for leases of low-value assets and short-term leases which are recognised straight line over the lease
term (included in the administrative expenses) amounted to €494,000 (2021: €379,000).
In addition to leases of low-value assets and payments resulting from short-term leases that are included in the cash flow from
operating activities, interest payments and repayments of lease liabilities totalling €6,350,000 (2021: €6,030,000) were incurred
forthe year and are included in the cash flow from financing activities.
160
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
19. Other non-current financial assets
31 March 2022
€000
31 March 2021
€000
Guarantees and deposits 4,052 1,806
Loans to associates 44,278 43,154
Balance as at year end 48,330 44,960
Loans to associates relate to shareholder loans granted to associates by the Group. The loans terminate on 31 December 2026, are
fully subordinated and are charged at a fixed interest rate. The ECL has been considered based on multiple factors such as history of
repayments, forward looking budgets and forecasts. Based on the assessment the ECL was immaterial.
20. Investment in associates
The principal activity of the associates is the investment in, and development of, commercial property located in Germany and to
provide conventional and flexible workspace. Since the associates are individually immaterial the Group is disclosing aggregated
information of the associates.
The following table illustrates the summarised financial information of the Group’s investment in associates:
31 March 2022
€000
31 March 2021
€000
Current assets 20,031 31,183
Non-current assets 349,796 244,289
Current liabilities (10,406) (10,224)
Non-current liabilities (294,121) (221,756)
Equity 65,300 43,492
Unrecognised accumulated losses 3,679 5,657
Subtotal 68,979 49,149
Group’s share in equity – 35% 24,142 17,202
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Net operating income 19,872 14,063
Gain on revaluation of investment properties 18,856 12,693
Administrative expense (3,001) (1,976)
Operating profit 35,727 24,780
Net finance costs (9,753) (9,078)
Profit before tax 25,974 15,702
Taxation (4,166) (2,590)
Unrecognised (profit)/losses (1,978) 1,109
Total comprehensive income for the year after tax 19,830 14,221
Group’s share of profit for the year – 35% 6,940 4,977
Included within the non-current liabilities are shareholder loans amounting to €126,509,000 (2021: €123,296,000). As at year
endno contingent liabilities existed (2021: none). The associates had contracted capital expenditure for development and
enhancements of €2,010,000 as at year end (2021: €296,000).
The following table illustrates the movement in investment in associates:
31 March 2022
€000
31 March 2021
€000
Balance as at the beginning of the year 17,202 12,306
Dividend received — (81)
Share of profit 6,940 4,977
Balance as at year end 24,142 17,202
Strategic report Governance Financial statements
161
Sirius Real Estate Limited Annual Report and Accounts 2022
21. Trade and other receivables
31 March 2022
€000
31 March 2021
€000
Gross trade receivables 18,791 11,758
Expected credit loss provision (refer to note 25) (7,722) (5,431)
Net trade receivables 11,069 6,327
Other receivables 8,865 11,334
Prepayments 4,637 1,070
Balance as at year end 24,571 18,731
Other receivables include lease incentives of €4,036,000 (2021: €3,603,000).
Prepayments include costs totalling €1,860,000 (31 March 2021: €nil) relating to the acquisition of a new site in Düsseldorf that was
notarised before 31 March 2022 and is expected to complete in the first half of the next financial year (see note 31).
22. Cash and cash equivalents
31 March 2022
€000
31 March 2021
€000
Cash at bank 127,285 49,305
Restricted cash 23,681 16,369
Balance as at year end 150,966 65,674
Cash at bank earns interest at floating rates based on daily bank deposit rates. The fair value of cash as at year end is €150,966,000
(2021: €65,674,000). Cash is held by reputable banks and the Group assessed the ECL to be immaterial.
The following table illustrates the breakdown of cash held in restricted accounts:
31 March 2022
€000
31 March 2021
€000
Deposits received from tenants 22,210 12,736
Office rent deposits 131 131
Cash reserved for future bank loan interest and amortisation payments of the Group’s bankingfacilities — 2,192
Deposit for bank guarantees 1,340 1,310
Total 23,681 16,369
The majority of the restricted cash is in relation to tenant deposits. Tenants’ deposits are legal securities of tenants retained by the
Group without the right to use these cash deposits for purposes other than strictly tenant related transactions (e.g. move-out costs,
costs due to non-compliance with certain terms of the lease agreement or late rent/service charge payments).
23. Trade and other payables
31 March 2022
€000
31 March 2021
€000
Trade payables 6,488 7,107
Accrued expenses 25,093 19,034
Interest and amortisation payable 5,625 489
Tenant deposits 22,210 12,736
Unearned revenue 7,913 4,642
Other payables 22,006 6,519
Balance as at year end 89,335 50,527
Accrued expenses include costs totalling €10,279,000 (2021: €9,465,000) relating to service charge costs that have not been
invoiced to the Group.
Included within other payables are mainly credit balances due to tenants in relation to over collections of service charge in amount
of €2,624,000 (2021: €3,830,000). As at 31 March 2022, other payables included €13,750,000 of proceeds relating to the sale of the
Magdeburg asset that is categorised as an asset held for sale at 31 March 2022 in advance of the completion date of 1 April 2022.
See note 15 for details of assets held for sale.
Unearned revenue includes service charge amounts of €1,164,000 (2021: €1,068,000). Service charge income is only recognised
asincome when the performance obligations are met. All unearned revenue of the prior year was recognised as revenue in the
current year.
162
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
24. Interest-bearing loans and borrowings
Interest rate
% Loan maturity date
31 March 2022
€000
31 March 2021
€000
Current
SEB AG
– fixed rate facility 1.84 1 September 2022 — 1,180
– hedged floating rate facility Hedged
(4)
30 October 2024 — 459
– capped floating rate facility Capped
(3)
25 March 2025 — 760
Berlin Hyp AG/Deutsche Pfandbriefbank AG
– fixed rate facility 1.66 27 April 2023 — 2,968
Berlin Hyp AG
– fixed rate facility 1.48 31 October 2023 1,909 1,881
– fixed rate facility 0.90 31 October 2023 1,480 1,467
Saarbrücken Sparkasse
– fixed rate facility 1.53 28 February 2025 771 760
Deutsche Pfandbriefbank AG
– hedged floating rate facility Hedged
(1)
31 December 2023 1,111 1,110
– floating rate facility Floating
(2)
31 December 2023 140 140
Schuldschein
– floating rate facility Floating
(2)
5 December 2022 5,000 —
– floating rate facility Floating
(2)
6 January 2023 10,000 —
Capitalised finance charges on all loans (781) (1,611)
19,630 9,114
Non-current
SEB AG
– fixed rate facility 1.84 1 September 2022 — 51,330
– hedged floating rate facility Hedged
(4)
30 October 2024 — 21,325
– floating rate facility Floating
(4)
30 October 2024 — 2,000
– capped floating rate facility Capped
(3)
25 March 2025 — 34,960
Berlin Hyp AG/Deutsche Pfandbriefbank AG
– fixed rate facility 1.66 27 April 2023 — 56,135
Berlin Hyp AG
– fixed rate facility 1.48 31 October 2023 58,228 60,137
– fixed rate facility 0.90 31 October 2023 110,363 111,843
Saarbrücken Sparkasse
– fixed rate facility 1.53 28 February 2025 14,258 15,030
Deutsche Pfandbriefbank AG
– hedged floating rate facility Hedged
(1)
31 December 2023 51,056 52,166
– floating rate facility Floating
(1)
31 December 2023 6,241 6,381
Schuldschein
– floating rate facility Floating
(2)
5 December 2022 — 5,000
– floating rate facility Floating
(2)
6 January 2023 — 10,000
– floating rate facility Floating
(2)
6 January 2025 5,000 5,000
– fixed rate facility 1.70 3 March 2025 10,000 10,000
– fixed rate facility 1.60 3 July 2023 20,000 20,000
Corporate bond I
– fixed rate 1.125 22 June 2026 400,000 —
Corporate bond II
– fixed rate 1.75 24 November 2028 300,000 —
Capitalised finance charges on all loans (13,283) (2,367)
961,863 458,940
Total 981,493 468,054
(1) Tranche 1 of this facility is fully hedged with a swap charged at a rate of 1.40%; tranche 2 of this facility is fully hedged with a swap charged at a rate
of 1.25%; and €19.1 million of tranche 3 of this facility is fully hedged with a swap charged at a rate of 0.91%. A €6.5 million extension and the
tranche 3 related €0.5 million arrangement fee are charged with a floating rate of 1.20% over three-month EURIBOR (not less than 0%).
(2) This unsecured facility has a floating rate of 1.50% over six month EURIBOR (not less than 0%) for the first two tranches and a floating rate of 1.70%
over six month EURIBOR (not less than 0%) for tranche 3.
(3) This facility was 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 was fully hedged with a swap charged at a rate of 2.58%; tranche 2 of this facility was fully hedged with a swap charged at
arate of 2.56%. The capex facility was charged with a floating rate of 1.88% over six month EURIBOR (not less than 0%) for the full term of the loan.
Strategic report Governance Financial statements
163
Sirius Real Estate Limited Annual Report and Accounts 2022
24. Interest-bearing loans and borrowings continued
The borrowings (excluding capitalised loan issue cost) are repayable as follows:
31 March 2022
€000
31 March 2021
€000
On demand or within one year 20,411 10,724
In the second year 246,671 75,977
In the third to tenth years inclusive 728,475 385,331
Total 995,557 472,032
The Group has pledged 15 (2021: 42) investment properties to secure several separate interest-bearing debt facilities granted to the
Group. The 15 (2021: 42) properties had a combined valuation of €504,709,000 as at year end (2021: €1,101,689,000).
SEB AG
On 2 September 2015, the Group agreed to a facility agreement with SEB AG for €59.0 million to refinance two existing Macquarie
loan facilities. The loan was scheduled to terminate on 1 September 2022. Amortisation was charged at 2% per annum with the
remainder scheduled to be due in the seventh year. The loan facility was charged at a fixed interest rate of 1.84%. This facility was
secured over eleven property assets that were previously financed through the Macquarie loan facilities. The facility was subject to
various covenants with which the Group had complied. The facility was repaid in full during the year.
On 30 October 2017, the Group agreed to a second facility agreement with SEB AG for €22.9 million. Tranche 1, totalling €20.0million,
was hedged at a rate of 2.58% until 30 October 2024 by way of an interest rate swap. Tranche 2, totalling €2.9 million, was hedged
ata rate of 2.56% until 30 October 2024 by way of an interest rate swap. The loan was scheduled to terminate on 30October 2024.
Amortisation was 2.0% per annum across the full facility with the remainder scheduled to be due in one instalment on the final
maturity date. The facility was secured over three property assets and was subject to various covenants with which the Group had
complied. In addition, the Group agreed a capex facility for €7.1 million until 30 October 2024. The capex facility was not subject to
amortisation and was charged with a floating interest rate of 1.88% over six month EURIBOR (not less than 0%) for the full term of
the loan. The capex facility is no longer available following the repayment of the SEB AG debt facilities during the year.
On 26 March 2018, the Group agreed to a third facility agreement with SEB AG for €38.0 million. The loan was scheduled to
terminate on 25 March 2025. Amortisation was 2% per annum with the remainder scheduled to be due in one instalment on the
final maturity date. The loan facility was 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 limited the Group’s interest rate exposure on the facility to 2.33%. The facility was secured over
six property assets and was subject to various covenants with which the Group had complied. In addition, the Group agreed a capex
facility for €8.0 million until 25 March 2025. The capex facility was not subject to amortisation and was charged at an interest rate of
1.58%. The capex facility was undrawn and is no longer available following the repayment of the SEB AG debt facilities during the
twelve month period ended 31 March 2022.
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 €115.0 million.
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 (€55.2 million) was charged interest at 3% plus three months’ EURIBOR and was capped at 4.5%, and the other
half (€55.2 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 has complied. On 28 April 2016, the Group agreed to refinance this facility which
had an outstanding balance of €110.4 million at 31 March 2016. The new facility was split in two tranches totalling €137.0 million
and was scheduled to terminate on 27 April 2023. Tranche 1, totalling €94.5 million, was charged at a fixed interest rate of 1.66% for
the full term of the loan. Tranche 2, totalling €42.5 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 was set at 2.5% across the full facility with the remainder scheduled to be
due in one instalment on the final maturity date.
On 30 June 2017, the Group repaid a total of €5.8 million following the disposal of the Düsseldorf asset. On 30 September 2017, the
Group repaid tranche 2 of the loan in full, amounting to €40.9 million, following the disposal of the Munich Rupert Mayer Strasse asset.
On 1 August 2019, the Group repaid a total of €16.8 million including €10.1 million recorded within liabilities directly associated with
assets held for sale as at 31 March 2019, following the disposal of two assets that acted as security for the loan into the Titanium
venture with AXA Investment Managers – Real Assets.
The facility was repaid in full during the twelve month period ended 31 March 2022.
Berlin Hyp AG
On 20 October 2016, the Group concluded an agreement with Berlin Hyp AG to refinance and extend a facility which had an
outstanding balance of €39.2 million on 30 September 2016. The facility totals €70.0 million and was scheduled to terminate on
29October 2023. Amortisation was 2.5% per annum with the remainder due at maturity. The facility was charged with an all-in fixed
interest rate of 1.48% for the full term of the loan. The facility was secured over six property assets. The loan was subject to various
covenants with which the Group had complied. On 13 September 2019, the facility was incorporated into the agreement as detailed
below. As a result, the maturity date of the loan was extended to 31 October 2023 with all other conditions remaining unchanged.
On 13 September 2019, the Group agreed to a facility agreement with Berlin Hyp AG for €115.4 million. The loan terminates on
31October 2023. Amortisation is 1.25% per annum with the remainder due in the fourth year. The loan facility is charged at a fixed
interest rate of 0.90%. This facility is secured over nine property assets. The facility is subject to various covenants with which the
Group has complied. No changes to the terms of the facility have occurred during the twelve month period ended 31 March 2022.
164
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
24. Interest-bearing loans and borrowings continued
Saarbrücken Sparkasse
On 28 March 2018, the Group agreed to a facility agreement with Saarbrücken Sparkasse for €18.0 million. The loan terminates on
28 February 2025. Amortisation is 4.0% per annum with the remainder due in one instalment on the final maturity date. The facility
ischarged with an all-in fixed interest rate of 1.53% for the full term of the loan. The facility is secured over one property asset and is
subject to various covenants with which the Group has complied. No changes to the terms of the facility have occurred during the
twelve month period ended 31 March 2022.
Deutsche Pfandbriefbank AG
On 19 January 2019, the Group agreed to a facility agreement with Deutsche Pfandbriefbank AG for €56.0 million. Tranche 1,
totalling €21.6 million, has been hedged at a rate of 1.40% until 31 December 2023 by way of an interest rate swap. A first
drawdown of tranche 3 totalling €0.5 million was charged at a fixed interest rate of 1.20%. On 3 April 2019, tranche 2 was drawn
down, totalling €14.8 million, and has been hedged at a rate of 1.25% until 31 December 2023 by way of an interest rate swap.
On28 June 2019, tranche 3 has been drawn down, totalling €19.1 million. Tranche 3 has been hedged at a rate of 0.91% until
31December 2023 by way of an interest rate swap. The facility is secured over five property assets and is subject to various
covenants with which the Group has complied.
On 19 February 2020, the Group agreed to extend tranche 3 of its existing facility by €6.5 million. The loan is coterminous with the
existing facility maturing in December 2023. The loan has been treated as a new loan and is charged with a floating interest rate of
1.20% plus three month EURIBOR (not less than 0%). Amortisation is 2% per annum with the remainder due in one instalment on
the final maturity date. No changes to the terms of the facility have occurred during the twelve month period ended 31 March 2022.
Schuldschein
On 2 December 2019, the Group agreed to new loan facilities in the form of unsecured Schuldschein for €20.0 million. On 25 February 2020,
the Group agreed new loan facilities in the form of unsecured Schuldschein for €30.0 million. In total the unsecured facility amounts
to €50.0 million spread over five tranches and is charged at a blended interest rate of 1.60% and average maturity of 2.6 years with
no amortisation. The Schuldschein is subject to various covenants with which the Group has complied. No changes to the terms of
the facility have occurred during the twelve month period ended 31 March 2022.
Corporate bond I
On 22 June 2021, the Group raised its inaugural corporate bond for €400.0 million. The bond has a term of five years and an interest
rate of 1.125% due annually on its anniversary date, with the principal balance coming due on 22 June 2026. The funds from the
bond have been partially utilised to repay the SEB AG and Berlin Hyp AG/Deutsche Pfandbriefbank AG loans and fund acquisitions.
The corporate bond is subject to various covenants with which the Group has complied. No changes to the terms of the facility have
occurred since the date of issuance.
Corporate bond II
On 24 November 2021, the Group issued its second corporate bond for €300.0 million. The bond has a term of seven years and
aninterest rate of 1.750% due annually on its anniversary date, with the principal balance coming due on 24 November 2028.
Thefunds from the bond have been utilised to fund the BizSpace Group acquisition and fund repayment of external loans held
byBizSpace Group amounting to €214.5 million at acquisition date. The corporate bond is subject to various covenants with which
the Group has complied. No changes to the terms of the facility have occurred since the date of issuance.
HSBC revolving credit facility
On 4 November 2021 the Company agreed a €75.0 million bi-lateral revolving credit facility with HSBC Trinkaus & Burkhardt.
Theloan facility is charged with a variable interest rate tied to the Company’s Fitch credit rating as follows: (a) BBB+ (1.2%),
(b)BBB(1.2%) and (c) BBB- or lower (1.5%) with a 0% EURIBOR floor. In addition, the facility’s loan covenants are consistent with
the corporate bond covenants. The loan facility is comprised of a (i) €25.0 million bilateral credit facility which has a two year term
and which may be extended twice for an additional year per extension and (ii) a €50 million bilateral top-up credit facility which is
repayable in full six months after draw down. The Company €50 million top-up credit facility was drawn down and subsequently
repaid in full during the period.
Group debt covenants
A summary of the Group’s debt covenants is set out below:
31 March 2022
€000
31 March 2021
€000
Carrying amount of interest-bearing loans and borrowings (note 24) 981,493 468,054
Unamortised borrowing costs 14,064 3,978
Book value of owned investment properties* 2,088,665 1,347,167
Gross loan to value ratio 47.7% 35.0%
* Includes assets held for sale.
Banking covenants vary according to each loan agreement and typically include loan to value and income related covenants.
Strategic report Governance Financial statements
165
Sirius Real Estate Limited Annual Report and Accounts 2022
24. Interest-bearing loans and borrowings continued
Group debt covenants continued
During the year, the Group did not breach any of its loan covenants, nor did it default on any of its obligations under its loan agreements.
Reconciliation of movements of liabilities arising from financing activities:
31 March
2021
€000
Cash flows
€000
New leases
€000
Acquisition
of a subsidiary
€000
Changes in
fair values
€000
Other *
€000
31 March
2022
€000
Interest-bearing loans andborrowings 468,054 523,524 — — — (10,085) 981,493
Lease liabilities 14,987 (6,350) 18,413 12,182 (571) 38,661
Derivative financial instruments 1,211 (544) (996) (329)
Total 484,252 516,630 18,413 12,182 (996) (10,656) 1,019,825
31 March
2020
€000
Cash flows
€000
New leases
€000
Non-cash
settlement
€000
Changes in
fair values
€000
Other *
€000
31 March
2021
€000
Interest-bearing loans andborrowings 480,228 (13,887) — — — 1,713 468,054
Lease liabilities 19,150 (5,681) 1,518 — — — 14,987
Derivative financial instruments 1,368 — — — (157) — 1,211
Total 500,746 (19,568) 1,518 — (157) 1,713 484,252
* Changes in the capitalised finance charges on all loans, foreign exchange differences and accretion of interest on lease liabilities.
25. Financial risk management objectives and policies
The Group’s principal financial liabilities comprise bank loans, derivative financial instruments and trade payables. The main purpose
of these financial instruments is to raise finance for the Group’s operations. The Group has various financial assets, such as trade
receivables and cash, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk, market risk, currency risk and interest rate risk.
Credit risk
Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows
fromfinancial assets on hand at the reporting date. The credit risk on liquid funds is limited because the counterparties are banks
with high credit ratings assigned by international credit rating agencies. The risk management policies employed by the Group to
manage these risks are discussed below.
In the event of a default by an occupational tenant, the Group will suffer a rental shortfall and incur additional costs, including expenses
incurred to try and recover the defaulted amounts and legal expenses in maintaining, insuring and marketing the property until it is
re-let. During the year, the Group monitored the tenants in order to anticipate and minimise the impact of defaults by occupational
tenants, as well as to ensure that the Group has a diversified tenant base. The credit risk on tenants is also addressed through the
performance of credit checks, collection of deposits and regular communication with the tenants.
Included in loans to associates are loans provided to associate entities from Group entities. During the year the Group assessed
credit risk relating to loans to associates by reviewing business plans and monitoring cash collection rates and the operational
performance of each associate in order to anticipate and minimise the impact of any impairment.
Included in other receivables are lease incentives. During the year the Group monitored tenants in order to anticipate and minimise
the impact of defaults and move-outs from tenants which received lease incentives.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was:
31 March 2022
€000
31 March 2021
€000
Trade receivables 11,069 6,327
Other receivables 8,764 9,537
Loans to associates 44,278 43,154
Derivative financial instruments 329 70
Cash and cash equivalents 150,966 65,674
Total 215,406 124,762
Included in other receivables are guarantees and deposits in amount of €4,052,000 (2021: €1,806,000).
166
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
25. Financial risk management objectives and policies continued
Credit risk continued
The ageing of trade receivables at the statement of financial position date was:
Year ended
31 March 2022
Year ended
31 March 2021
Gross
€000
Impairment
€000
Gross
€000
Impairment
€000
0–30 days 12,117 (2,704) 6,287 (1,936)
31–120 days (past due) 1,296 (406) 1,206 (585)
More than 120 days 5,378 (4,612) 4,265 (2,910)
Total 18,791 (7,722) 11,758 (5,431)
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
31 March 2022
€000
31 March 2021
€000
Balance as at the beginning of the year (5,431) (3,640)
Expected credit loss recognised (2,291) (1,791)
Balance as at year end (7,722) (5,431)
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 €11,069,000
(2021: €6,327,000) that are past due at the reporting date for which the Group has not provided significant impairment as there
hasnot been a significant change in credit quality and the amounts are still considered recoverable.
No significant impairment has been recognised relating to non-current receivables in the period due to unchanged credit quality
andthe amounts are still considered recoverable.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially
enhances profitability but can also increase the risk of losses. The Group has procedures with the objective of minimising such
losses, such as maintaining sufficient cash and other highly liquid current assets and having available an adequate amount of
committed credit facilities. The Group prepares cash flow forecasts and continually monitors its ongoing commitments compared
toavailable cash. Cash and cash equivalents are placed with financial institutions on a short-term basis which allows immediate
access. This reflects the Group’s desire to maintain a high level of liquidity in order to meet any unexpected liabilities that may arise
due to the current financial position. Similarly, accounts receivable are due either in advance (e.g. rents and recharges) or within
tendays (e.g.service charge reconciliations), further bolstering the Group’s management of liquidity risk.
The table below summarises the maturity profile of the Group’s financial liabilities, based on contractual undiscounted payments:
31 March 2022
Bank
loans
€000
Derivative
financial
instruments
€000
Trade
and other
payables
€000
Lease
liabilities
€000
Total
€000
Undiscounted amounts payable in:
6 months or less (9,520) (119) (56,329) (1,311) (67,279)
6 months–1 year (24,486) (118) — (789) (25,393)
1–2 years (258,758) (232) — (2,910) (261,900)
2–5 years (454,658) (58) — (9,001) (463,717)
5–10+ years (308,688) — — (92,307) (400,995)
(1,056,110) (527) (56,329) (106,318) (1,219,284)
Interest 60,553 527 — 67,657 128,737
(995,557) — (56,329) (38,661) (1,090,547)
Strategic report Governance Financial statements
167
Sirius Real Estate Limited Annual Report and Accounts 2022
25. Financial risk management objectives and policies continued
Liquidity risk continued
31 March 2021
Bank
loans
€000
Derivative
financial
instruments
€000
Trade
and other
payables
€000
Lease
liabilities
€000
Total
€000
Undiscounted amounts payable in:
6 months or less (8,755) (220) (26,851) (3,047) (38,873)
6 months–1 year (8,588) (216) — (3,048) (11,852)
1–2 years (81,895) (426) — (1,492) (83,813)
2–5 years (389,971) (435) — (2,428) (392,834)
5–10+ years — — — (7,223) (7,223)
(489,209) (1,297) (26,851) (17,238) (534,595)
Interest 17,177 1,297 — 2,251 20,725
(472,032) — (26,851) (14,987) (513,870)
Currency risk
The Group’s exposure to currency risk relates primarily to the Group’s exposure to the British pound and to a lesser extent the South
African rand. This exposure is driven primarily by the acquisition of the BizSpace Group as detailed in Note 4. In addition thereto, the
Group has dividend obligations in both the British Pound and South African rand. The foreign currency risk in relation to the British
pound is mitigated as a result of the BizSpace Group generating British pound denominated income in order to fund its obligations
when they come due and, in addition, the Group’s British pound dividend obligations. The Group holds small deposits in South African
rand for the purposes of working capital and dividend obligations.
Interest rate risk
The Group’s exposure to interest rate risk relates primarily to the Group’s long-term floating rate debt obligations. The Group’s policy
is to mitigate interest rate risk by ensuring that a minimum of 80% of its total borrowing is at fixed or capped interest rates by taking
out fixed rate loans or derivative financial instruments to hedge interest rate exposure, or interest rate caps.
A change in interest will only have an impact on loans fixed by a swap. An increase of 100 bps in interest rate would result in a
decreased post tax profit in the consolidated income statement of €275,000 (2021: €562,000) (excluding the movement on
derivative financial instruments) and a decrease of 100 bps in interest rate would result in an increased post tax profit in the
consolidated income statement of €275,000 (2021: €562,000) (excluding the movement on derivative financial instruments).
The following table sets out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest rate risk:
31 March 2022
Within 1 year
€000
1–2 years
€000
2–3 years
€000
3–4 years
€000
4+ years
€000
Total
€000
Deutsche Pfandbriefbank AG (140) (6,241) — — — (6,381)
Schuldschein (15,000) — (5,000) — — (20,000)
31 March 2021
Within 1 year
€000
1–2 years
€000
2–3 years
€000
3–4 years
€000
4+ years
€000
Total
€000
SEB AG – capped (760) (760) (760) (33,440) — (35,720)
SEB AG – floating — — — (2,000) — (2,000)
Deutsche Pfandbriefbank AG (140) (140) (6,241) — — (6,521)
Schuldschein — (15,000) — (5,000) — (20,000)
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.
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.
168
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
25. Financial risk management objectives and policies continued
Capital management
For the purpose of the Group’s capital management, capital includes all equity reserves attributable to the equity holders of the
parent. The Group seeks to enhance shareholder value both by investing in the business so as to improve the return on investment
and by managing the capital structure. The Group manages its capital structure and in doing so takes into consideration the impact
of changes in economic conditions. The Group assesses its capital management through the total accounting shareholder return
which was 20.0% as at 31 March 2022 (31 March 2021: 19.5%) and the net loan to value which was 41.6% as at 31 March 2022 (31
March 2021: 31.4%).
To maintain or adjust the capital structure, the Group may undertake a number of actions including but not limited to share
issuances and changes to its distribution policy to shareholders. The transfer of amounts recorded in share capital to other
distributable reserves is made in accordance with The Companies (Guernsey) Law, 2008. The Group’s distribution policy takes into
account the concept of solvency under The Companies (Guernsey) Law, 2008. The Group is not subject to externally imposed
capital requirements other than those related to the covenants of the bank loan facilities. There have been no breaches of the
financial covenants of any interest bearing loans and borrowings in the current period.
26. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial instruments that are
carried in the financial statements (excluding assets held for sale and liabilities directly associated with assets held for sale):
Fair value
hierarchy level
31 March 2022 31 March 2021
Carrying
amount
€000
Fair
value
€000
Carrying
amount
€000
Fair
value
€000
Financial assets
Cash and cash equivalents 150,966 150,966 65,674 65,674
Trade and other receivables 19,833 19,833 15,864 15,864
Loans to associates 2 44,278 44,278 43,154 43,154
Derivative financial instruments 2 329 329 70 70
Financial liabilities
Trade and other payables 56,329 56,329 26,851 26,851
Derivative financial instruments 2 — — 1,211 1,211
Interest-bearing loans and borrowings
(1)
Floating rate borrowings 2 26,381 26,381 28,521 28,521
Floating rate borrowings – hedged
(2)
2 52,167 52,167 75,060 75,060
Floating rate borrowings – capped 2 — — 35,720 35,720
Fixed rate borrowings 2 917,009 939,238 332,731 336,216
All amounts in the table above are carried at amortised cost except for derivative financial instruments which are held at fair value.
(1) Excludes loan issue costs.
(2) The Group holds interest rate swap contracts designed to manage the interest rate and liquidity risks of expected cash flows of its borrowings with
the variable rate facilities with Deutsche Pfandbriefbank AG. Please refer to note 24 for details of swap contracts.
Fair value hierarchy
For financial assets or liabilities measured at amortised cost and whose carrying value is a reasonable approximation to fair value
there is no requirement to analyse their value in the fair value hierarchy.
The below analyses financial instruments measured at fair value into a fair value hierarchy based on the valuation technique used to
determine fair value:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e.asprices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group holds interest rate swap contracts which are reset on a quarterly basis. The fair value of interest rate swaps is based on
broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and
maturity of each contract and using market interest rates for a similar instrument at the measurement date. The average interest rate
is based on the outstanding balances at the end of the reporting period. The interest rate swap is measured at fair value with
changes recognised in profit or loss.
Strategic report Governance Financial statements
169
Sirius Real Estate Limited Annual Report and Accounts 2022
The fair values of the loans and borrowings have been calculated based on a discounted cash flow model using the prevailing
market rates of interest.
27. Issued share capital
Authorised
Number
of shares
Share
capital
€
Ordinary shares of no par value Unlimited —
As at 31 March 2022 and 31 March 2021 Unlimited —
Issued and fully paid
Number
of shares
Share
capital
€
As at 31 March 2020 1,036,257,101 —
Issued ordinary shares 14,447,046 13,169,000
Transfer of share capital to other distributable reserves — (13,169,000)
Shares issued to Employee Benefit Trust (1,883,980) —
Shares allocated by the Employee Benefit Trust 312,092 —
As at 31 March 2021 1,049,132,259 —
Issued ordinary shares 119,344,125 167,380,000
Transfer of share capital to other distributable reserves — (167,380,000)
Shares issued to Employee Benefit Trust (3,557,745) —
Shares allocated by the Employee Benefit Trust 1,962,045 —
As at 31 March 2022 1,166,880,684 —
Holders of the ordinary shares are entitled to receive dividends and other distributions and to attend and vote at any general
meeting. Shares held in treasury are not entitled to receive dividends or to vote at general meetings.
Pursuant to a scrip dividend offering on 14 June 2021, the Company issued 8,101,162 ordinary shares at an issue price of £1.00432
resulting in the Company’s overall issued share capital being 1,064,184,239 ordinary shares.
Pursuant to an equity raise of €159.9 million on 12 November 2021, the Company issued 105,281,686 ordinary shares at an issue
price of £1.30, resulting in the Company’s overall issued share capital being 1,169,465,925 ordinary shares. Costs associated with
the equity raise amounted to €6,219,000.
Pursuant to a scrip dividend offering on 29 November 2021, the Company issued 2,695,067 ordinary shares at an issue price of
£1.37726 resulting in the Company’s overall issued share capital being 1,172,160,992 ordinary shares.
In addition, during the year the Company issued 3,266,210 shares in relation to the exercise of the LTIP 2019 (January 2019 grant)
as per note 9.
Treasury shares held by the Employee Benefit Trust are disclosed as own shares held. During the year 3,557,745 shares were
acquired and 1,962,045 were allocated by the Employee Benefit Trust. A total of 5,280,308 own shares purchased at an average
share price of €1.1882 are held by the Employee Benefit Trust (2021: 3,684,608 own shares purchased at an average share price of
€0.7878). The total number of shares with voting rights was 1,172,160,992 (2021: 1,052,816,867). Novotes are cast in respect of
the shares held in the Employee Benefit Trust in connection with the Company’s share plans and dividends paid and payable are
subject to a standing waiver.
All shares issued in the year were issued under general authority. No shares were bought back in the year (2021: none) and there
areno Treasury Shares held directly by the parent company at the year end (2021: none).
28. Other reserves
Other distributable reserve
The other distributable reserve was created for the payment of dividends and the transfer of share capital in regard to scrip dividends,
share-based payment transactions and the buyback of shares and is €570,369,000 in total at year end (2021: €449,051,000).
170
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
29. Dividends
On 1 June 2020, the Company announced a dividend of 1.80c per share, with a record date of 10 July 2020 for UK and South African
shareholders and payable on 20 August 2020. On the record date, 1,038,369,821 shares were in issue with none held in treasury
and 1,038,369,821 (including shares held by the EBT) were entitled to participate in the dividend. Holders of 335,705,489 shares
elected to receive the dividend in ordinary shares under the scrip dividend alternative, representing a dividend of €6,043,000
(€5,830,000 as at settlement date), whileholders of 700,213,704 shares opted for a cash dividend with a value of €12,603,000.
TheCompany’s Employee Benefit Trust waived its rights to the dividend, reducing the cash payable to €12,595,000 (€12,595,000
asat settlement date). The total dividend was €18,646,000.
On 30 November 2020, the Company announced a dividend of 1.82c per share, with a record date of 18 December 2020 for UK
and South African shareholders and payable on 21 January 2021. On the record date, 1,045,351,272 shares were in issue. Since
there were no shares held in treasury, 1,045,351,272 (including shares held by the EBT) shares were entitled to participate in the
dividend. Holders of 403,075,659 shares elected to receive the dividend in ordinary shares under the scrip dividend alternative,
representing a dividend of €7,336,000 (€7,339,000 as at settlement date) while holders of 638,591,005 shares opted for a cash
dividend with a value of €11,622,000. TheCompany’s Employee Benefit Trust waived its rights to the dividend, reducing the cash
payable to €11,555,000 (€11,653,000 asat settlement date). The total dividend was €18,958,000.
On 7 June 2021, the Company announced a dividend of 1.98c per share, with a record date of 9 July 2021 for UK and South African
shareholders and payable on 19 August 2021. On the record date, 1,054,755,527 shares were in issue. Since there were no shares
held in treasury, 1,054,755,527 shares (including shares held by the Employee Benefit Trust) were entitled to participate in the dividend.
Holders of 476,206,726 shares elected to receive the dividend in ordinary shares under the scrip dividend alternative, representing
adividend of €9,429,000 (€9,195,000 as at settlement date) while holders of 578,548,801 shares opted for a cash dividend with
avalue of €11,455,000. The Company’s Employee Benefit Trust waived its rights to the dividend, reducing the cash payable to
€11,388,000 (€11,381,000 as at settlement date). The total dividend was €20,817,000 (€20,576,000 as at settlement date).
On 8 November 2021, the Company announced a dividend of 2.04c per share, with a record date of 17 December 2021 for
UKandSouth African shareholders and payable on 20 January 2022. On the record date, 1,169,465,925 shares were in issue.
Sincethere were no shares held in treasury, 1,169,465,925 shares (including shares held by the Employee Benefit Trust) were
entitled to participate in the dividend. Holders of 216,062,440 shares elected to receive the dividend in ordinary shares under the
scrip dividend alternative, representing a dividend of €4,408,000 (€4,478,000 as at settlement date) while holders of 953,403,485
shares opted for a cash dividend with a value of €19,449,000. The Company’s Employee Benefit Trust waived its rights to the
dividend, reducing the cash payable to €19,373,000 (€19,434,000 as at settlement date). The total dividend was €23,781,000
(€23,912,000 as at settlement date).
The Group’s profit attributable to the equity holders of the Company for the year was €147.9 million (2021: €147.5 million).
TheBoard has authorised a dividend in respect of the second half of the financial year ended 31 March 2022 of 2.37c per
sharerepresenting 65% of FFO, an increase of 19.7% on the equivalent dividend last year, which represented 65% of FFO
(1)
.
Thetotal dividend for the year is 4.41c, an increase of 16.1% on the 3.80c total dividend for the year ended 31 March 2021.
It is expected that, for the dividend authorised relating to the six month period ended 31 March 2022, the ex-dividend date will be
6July 2022 for shareholders on the South African register and 7 July 2022 for shareholders on the UK register. It is further expected
that for shareholders on both registers the record date will be 8 July 2022 and the dividend will be paid on 18 August 2022. A detailed
dividend announcement was made on 20 June 2022, including details of a scrip dividend alternative.
The dividend paid per the statement of changes in equity is the value of the cash dividend.
(1) Adjusted profit before tax adjusted for foreign exchange effects, depreciation and amortisation (excluding depreciation relating to IFRS 16),
amortisation of financing fees, adjustments in respect of IFRS 16 and current tax receivable/incurred andcurrent tax relating to disposals.
Strategic report Governance Financial statements
171
Sirius Real Estate Limited Annual Report and Accounts 2022
29. Dividends continued
The dividend per share was calculated as follows:
Year ended
31 March 2022
€m
Year ended
31 March 2021
€m
Reported profit before tax 168.9 163.7
Adjustments for:
Gain on revaluation of investment properties (140.9) (99.6)
Deficit on revaluation expense relating to leased investment properties (5.6) (4.3)
Loss/(gain) of disposals of properties 0.6 (0.1)
Recoveries from prior disposals of subsidiaries (0.1) (0.1)
Deduct revaluation gain on investment property from associates and related tax (4.8) (3.3)
Other adjusting items
(1)
19.1 4.1
Goodwill impairment 40.9 —
Change in fair value of financial derivatives (1.0) (0.1)
Adjusted profit before tax 77.1 60.3
Adjustments for:
Foreign exchange effects
(2)
(1.9) —
Depreciation and amortisation (excluding depreciation relating to IFRS 16) 2.3 1.6
Amortisation of financing fees 2.6 1.7
Adjustment in respect of IFRS 16 0.6 (0.9)
Current taxes incurred (see note 11) (6.1) (1.9)
Add back current tax relating to disposals — 0.1
Funds from operations, year ended 31 March 74.6 60.9
Funds from operations, 6 months ended 30 September 33.0 29.1
Funds from operations, 6 months ended 31 March 41.6 31.8
Dividend pool, 6 months ended 30 September 21.6 19.0
Dividend pool, 6 months ended 31 March
(3)
27.6 20.7
Dividend per share, 6 months ended 30 September 2.04c 1.82c
Dividend per share, 6 months ended 31 March 2.37c 1.98c
(1) Includes the effect of exceptional items, refinancing activity, share awards and expected selling costs relating to assets held for sale. See note 12
fordetails.
(2) Management decided to exclude foreign exchange effects from the funds from operations calculation (2021: €nil).
(3) Calculated as 65% of FFO of 3.64c per share (2021: 3.04c per share using 65% of FFO) based on average number of shares outstanding of
1,141,807,790 (2021: 1,044,538,046).
For more information on adjusted profit before tax and funds from operations refer to Annex 1.
Calculations contained in this table are subject to rounding differences.
30. Related parties
Fees paid to people considered to be key management personnel of the Group during the year include:
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Directors’ fees 530 437
Salary and employee benefits 4,294 3,531
Share-based payments 2,643 2,623
Total 7,467 6,591
The share-based payments relating to key management personnel for the year include an expense of €2,643,000 (2021: €2,623,000)
for the granting of shares under the LTIP (see note 8). Included within salary and employee benefits are pension contributions
amounting to €180,000 (2021: €146,000).
Information on Directors’ emoluments is given in the Remuneration report on pages 91 to 112. Related parties are defined as those
persons and companies that control the Group, or that are controlled, jointly managed or subject to significant influence by the Group.
172
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
30. Related parties continued
The following balances and transactions with associates exist as at the reporting date:
Consolidated statement of financial position
31 March 2022
€000
31 March 2021
€000
Loans to associates 44,278 43,154
Trade and other receivables 2,527 3,371
Total 46,805 46,525
Trade and other receivables relate to amounts owed from the services supplied to the associates and are due to be settled in the
normal course of business.
As a result of unchanged credit quality no material impairments have been recognised in the year.
Consolidated income statement
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Services supplied 13,153 7,338
Interest income 2,891 2,674
Total 16,044 10,012
Services provided to related parties primarily relate to the provision of property and asset management services. A performance fee
arrangement is in place between the associates and the Group. The performance fee was €nil during the year (2021: €nil).
31. Capital and other commitments
As at year end, the Group had contracted capital expenditure for development and enhancements on existing properties of
€7,846,000 (2021: €8,666,000) and capital commitments in relation to the notarised asset in Düsseldorf of €35,300,000.
These were committed but not yet provided for in the financial statements.
32. Operating lease arrangements
Group as lessor
All properties leased by the Group are under operating leases and the future minimum lease payments receivable under
non-cancellable leases are as follows:
31 March 2022
€000
31 March 2021
€000
Less than 1 year 118,118 84,417
1–2 years 96,086 61,549
2–3 years 75,7 26 41,491
3–4 years 57,676 33,044
4–5 years 35,616 18,792
More than 5 years 68,566 35,211
Total 451,788 274,504
The Group leases out its investment properties under operating leases. Most operating leases are for terms of one to ten years.
Strategic report Governance Financial statements
173
Sirius Real Estate Limited Annual Report and Accounts 2022
33. List of subsidiary undertakings
The Group consists of 122 subsidiary companies (2021: 94 subsidiary companies). All subsidiaries are consolidated in full in
accordance with IFRS. The principal activity of the subsidiaries is the investment in, and development of, commercial property to
provide conventional and flexible workspace inGermany and UK. The acquired subsidiaries in the UK have aligned their reporting
period to the Group’s reporting period.
Company name
Country
of incorporation
Ownership at
31 March 2022
%
Ownership at
31 March 2021
%
BizSpace Acquisitions Ltd Jersey 100.00 n/a
BizSpace Developments Ltd UK 100.00 n/a
BizSpace Green Holdings Ltd UK 100.00 n/a
BizSpace Green Operations Ltd UK 100.00 n/a
BizSpace Holdings Ltd UK 100.00 n/a
BizSpace II Ltd UK 100.00 n/a
BizSpace Ltd UK 100.00 n/a
BizSpace Property 100 Ltd Jersey 100.00 n/a
BizSpace Property I Ltd UK 100.00 n/a
BizSpace Property SSP Ltd UK 100.00 n/a
Curris Facilities & Utilities Management GmbH Germany 100.00 100.00
DDS Aspen B.V. Netherlands 100.00 100.00
DDS Bagnut B.V. Netherlands 100.00 100.00
DDS Business Centres B.V. Netherlands 100.00 100.00
DDS Coconut B.V. Netherlands 100.00 100.00
DDS Conferencing & Catering GmbH Germany 100.00 100.00
DDS Elm B.V. Netherlands 100.00 100.00
DDS Fir B.V. Netherlands 100.00 100.00
DDS Hawthorn B.V. Netherlands 100.00 100.00
DDS Hazel B.V. Netherlands 100.00 100.00
DDS Hyacinth B.V. Netherlands 100.00 100.00
DDS Lark B.V. Netherlands 100.00 100.00
DDS Mulberry B.V. Netherlands 100.00 100.00
DDS Rose B.V. Netherlands 100.00 100.00
DDS Walnut B.V. Netherlands 100.00 100.00
DDS Yew B.V. Netherlands 100.00 100.00
Helix FinCo Ltd Jersey 100.00 n/a
Helix Investments Ltd* Jersey 100.00 n/a
Helix Property Ltd Jersey 100.00 n/a
LB Catering and Services GmbH Germany 100.00 100.00
M25 Business Centres Ltd UK 100.00 n/a
Marba Apple B.V. Netherlands 100.00 100.00
Marba Bamboo B.V. Netherlands 100.00 100.00
Marba Cherry B.V. Netherlands 100.00 100.00
Marba Daffodil B.V. Netherlands 100.00 100.00
Marba Holland B.V.* Netherlands 100.00 100.00
Marba Lavender B.V. Netherlands 100.00 100.00
Marba Mango B.V. Netherlands 100.00 100.00
Marba Olive B.V. Netherlands 100.00 100.00
Marba Sunflower B.V. Netherlands 100.00 100.00
Marba Violin B.V. Netherlands 100.00 100.00
Marba Willstätt B.V. Netherlands 100.00 100.00
SFG NOVA Construction and Services GmbH Germany 100.00 100.00
Sirius Alder B.V. Netherlands 100.00 100.00
Sirius Aloe GmbH & Co. KG Germany 100.00 100.00
Sirius Ash B.V. Netherlands 100.00 100.00
Sirius Aster GmbH & Co. KG Germany 100.00 100.00
174
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
Company name
Country
of incorporation
Ownership at
31 March 2022
%
Ownership at
31 March 2021
%
Sirius Beech B.V. Netherlands 100.00 100.00
Sirius Birch GmbH & Co. KG Germany 100.00 100.00
Sirius Coöperatief B.A.* Netherlands 100.00 100.00
Sirius Dahlia GmbH & Co. KG Germany 100.00 100.00
Sirius Facilities (UK) Ltd* UK 100.00 100.00
Sirius Facilities GmbH Germany 100.00 100.00
Sirius Finance (Cyprus) Ltd.* Cyprus 100.00 100.00
Sirius Four B.V. Netherlands 100.00 100.00
Sirius Frankfurt Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Frankfurt Zweite GmbH & Co. KG Germany 100.00 n/a
Sirius Gum B.V. Netherlands 100.00 100.00
Sirius Ivy B.V. Netherlands 100.00 100.00
Sirius Jasmine GmbH & Co. KG Germany 100.00 n/a
Sirius Juniper B.V. Netherlands 100.00 100.00
Sirius Kale GmbH & Co. KG Germany 100.00 n/a
Sirius Krefeld Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Lily B.V. Netherlands 100.00 100.00
Sirius Lotus GmbH & Co. KG Germany 100.00 n/a
Sirius Management One GmbH Germany 100.00 100.00
Sirius Management Two GmbH Germany 100.00 100.00
Sirius Management Three GmbH Germany 100.00 100.00
Sirius Management Four GmbH Germany 100.00 100.00
Sirius Management Five GmbH Germany 100.00 100.00
Sirius Management Six GmbH Germany 100.00 100.00
Sirius Management Seven GmbH Germany 100.00 100.00
Sirius Management Eight GmbH Germany 100.00 100.00
Sirius Management Nine GmbH Germany 100.00 100.00
Sirius Management Ten GmbH Germany 100.00 100.00
Sirius Mannheim B.V. Netherlands 100.00 100.00
Sirius Narcissus GmbH & Co. KG Germany 100.00 n/a
Sirius Oak B.V. Netherlands 100.00 100.00
Sirius One B.V. Netherlands 100.00 100.00
Sirius Orange B.V. Netherlands 100.00 100.00
Sirius Palm B.V. Netherlands 100.00 n/a
Sirius Pear B.V. Netherlands 100.00 100.00
Sirius Pepper GmbH & Co. KG Germany 100.00 n/a
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 Thyme B.V. Netherlands 100.00 n/a
Sirius Tulip B.V. Netherlands 100.00 100.00
Sirius Two B.V. Netherlands 100.00 100.00
Sirius UK1 Ltd* UK 100.00 n/a
Sirius UK2 Ltd* UK 100.00 n/a
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 9 9.73 99.73
Marba Cedarwood B.V. Netherlands 99.73 99.73
Marba Chestnut B.V. Netherlands 9 9.73 99.73
33. List of subsidiary undertakings continued
Strategic report Governance Financial statements
175
Sirius Real Estate Limited Annual Report and Accounts 2022
Company name
Country
of incorporation
Ownership at
31 March 2022
%
Ownership at
31 March 2021
%
Marba Dutch Holdings B.V. Netherlands 99.73 99.73
Marba Foxglove B.V. Netherlands 99.73 99.73
Marba HAG B.V. Netherlands 99.73 99.73
Marba Hornbeam B.V. Netherlands 99.73 99.73
Marba Königswinter B.V. Netherlands 99.73 99.73
Marba Maintal B.V. Netherlands 99.73 99.73
Marba Marigold B.V. Netherlands 99.73 99.73
Marba Merseburg B.V. Netherlands 99.73 99.73
Marba Mimosa B.V. Netherlands 99.73 99.73
Marba Regensburg B.V. Netherlands 99.73 99.73
Marba Saffron B.V. Netherlands 99.73 99.73
Marba Troisdorf B.V. Netherlands 99.73 99.73
Sirius Acerola GmbH & Co. KG Germany 99.73 99.73
Sirius Almond GmbH & Co. KG Germany 99.73 99.73
Sirius Bluebell GmbH & Co. KG Germany 9 9.73 99.73
Sirius Cypress GmbH & Co. KG Germany 99.73 99.73
Sirius Grape GmbH & Co. KG Germany 99.73 100.00
Sirius Hibiscus GmbH & Co. KG Germany 99.73 n/a
Sirius Indigo GmbH & Co. KG Germany 9 9.73 n/a
Sirius Mayflower GmbH & Co. KG Germany 99.73 n/a
Sirius Oyster 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 Bilderstöckchen GmbH Germany 94.15 94.15
* Subsidiary company directly held by the parent entity, Sirius Real Estate Limited.
Investment in associates which are accounted for with the equity method:
Company name
Country
of incorporation
Ownership at
31 March 2022
%
Ownership at
31 March 2021
%
DDS Daisy B.V. Netherlands 35.00 35.00
DDS Edelweiss B.V. Netherlands 35.00 35.00
DDS Lime B.V. Netherlands 35.00 35.00
DDS Maple B.V. Netherlands 35.00 35.00
Sirius Boxwood B.V. Netherlands 35.00 35.00
Sirius Laburnum B.V. Netherlands 35.00 35.00
Sirius Orchid B.V. Netherlands 35.00 35.00
34. Post balance sheet events
The Group converted the UK business into a REIT with effect from 1 April 2022, resulting inthe BizSpace Group no longer being
subject to UK corporation tax on income from its property rental business, as well as on profits ondisposals of assets.
On 29 October 2021, the Company notarised for the disposal of an asset in Magdeburg for a sale price of €13.8 million.
Thetransaction completed on 1 April 2022.
On 1 May 2022, the Group completed the acquisition of an office building adjacent to and integrated into its existing business park
in Potsdam. Total acquisition costs are expected to be €0.8 million. The property is 100% vacant and has a gross lettable area of
239sqm.
On 16 May 2022 the Group notarised the sale of an asset in Camberwell, London, for £16.0 million (€18.9 million). The multi-tenanted
business park, which comprises approx. 34,700 sq ft (3,224 sqm) of industrial and office space, is 91% occupied. The sale is
expected to complete in July 2022.
33. List of subsidiary undertakings continued
176
Sirius Real Estate Limited Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March 2022
Non-IFRS measures
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Total profit for the year attributable to the owners of the Company 147,873 147,451
Gain on revaluation of investment properties (140,884) (99,585)
Loss on disposal of properties (net of related tax) 623 33
Recoveries from prior disposals of subsidiaries (net of related tax) (94) (65)
Add finance restructuring costs 7,821 —
Goodwill impairment 40,906 —
Acquisition costs in relation to business combinations 5,299 —
Change in fair value of derivative financial instruments (996) (136)
Deferred tax in respect of EPRA earnings adjustments 14,827 14,180
NCI in respect of the above 85 82
Deduct revaluation surplus relating to investment in associates (6,021) (4,199)
Tax in relation to the above 1,256 872
EPRA earnings 70,695 58,633
(Deduct)/add change in deferred tax relating to derivative financial instruments (203) 79
Add change in fair value of derivative financial instruments 996 136
Deduct finance restructuring costs (7,821) —
Deduct acquisition costs in relation to business combinations (5,299) —
NCI in respect of the above — —
Headline earnings after tax 58,368 58,848
Deduct change in fair value of derivative financial instruments (net of related tax) (793) (215)
Deduct revaluation expense relating to leased investment properties (5,572) (4,325)
Add adjusting items
(1)
(net of related tax) 19,122 4,092
Adjusted earnings after tax 71,125 58,400
(1) See note 12 to the financial statements.
For more information on EPRA earnings refer to Annex 1.
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
EPRA earnings 70,695 58,633
Weighted average number of ordinary shares 1,097,082,162 1,040,956,722
EPRA earnings per share (cents) 6.44 5.63
Headline earnings after tax 58,368 58,848
Weighted average number of ordinary shares 1,097,082,162 1,040,956,722
Headline earnings per share (cents) 5.32 5.65
Adjusted earnings after tax 71,125 58,400
Weighted average number of ordinary shares 1,097,082,162 1,040,956,722
Adjusted earnings per share (cents) 6.48 5.61
Strategic report Governance Financial statements
177
Sirius Real Estate Limited Annual Report and Accounts 2022
BUSINESS ANALYSIS UNAUDITED INFORMATION
Geographical property analysis – owned investment properties
Germany
March 2022
No. of
owned
properties
Total sqm
000 Occupancy
Rate psqm
€
Annualised
rent roll
€m
% of
portfolio by
annualised
rent roll
Value
€m
(2)
Gross
yield
Net
yield
WALE
rent
WALE
sqm
Frankfurt 16 371 88.5% 6.72 26.5 23% 361.5 7.3% 6.7% 2.6 2.6
Berlin 4 103 97.6% 7.82 9.5 8% 162.4 5.8% 5.7% 2.4 2.4
Stuttgart 9 331 87.3% 4.91 17.0 15% 241.2 7.1% 6.3% 3.5 3.8
Cologne 7 129 87.5% 8.01 10.8 10% 155.4 7.0% 6.5% 3.0 2.9
Munich 3 124 83.6% 8.17 10.2 9% 197.8 5.1% 5.0% 2.2 2.5
Düsseldorf 15 352 78.1% 5.59 18.4 16% 248.9 7.4% 6.2% 3.0 3.3
Hamburg 4 91 82.1% 5.13 4.6 4% 61.8 7.5% 6.4% 2.3 2.2
Other 11 284 76.9% 6.37 16.7 15% 207.9 8.0% 7.0% 3.3 3.2
Total Germany 69 1,785 84.2% 6.31 113.7 100% 1,636.9 6.9% 6.2% 2.9 3.0
UK
March 2022
No. of owned
properties
Total sqm
000 Occupancy
Rate psqm
€
(1)
Annualised
rent roll
€m
(1)
% of
portfolio by
annualised
rent roll
Value
€m
(2)
Net
yield
WALE
rent
WALE
sqm
Midlands 11 63 88.7% 11.81 7.8 15% 63.6 9.1% 0.6 1.3
North 12 77 93.7% 8.14 7.1 13% 67.1 8.0% 1.1 1.4
North East 9 59 90.4% 6.11 3.9 7% 35.5 6.4% 0.9 1.1
North West 12 85 92.2% 10.16 9.5 18% 77.5 9.2% 0.9 1.6
South 11 39 90.2% 27.24 11.5 22% 101.5 8.3% 0.9 1.8
South East 8 32 66.4% 19.37 5.0 9% 46.4 6.5% 0.8 1.6
South West 9 48 87.6% 16.39 8.5 16% 60.2 6.7% 1.1 1.7
Total UK 72 403 88.9% 12.39 53.3 100% 451.8 8.0% 0.8 1.3
(1) The Group’s UK business charge licence customers an all inclusive rate, which includes an implicit element of service charge.
(2) Book value of owned investment properties including assets held for sale.
Usage analysis
Germany
Usage
Total
sqm
% of total
sqm
Occupied
sqm
% of occupied
sqm
Annualised
rent roll
€m
% of annualised
rent roll
Vacant
sqm
Rate psqm
€
Office 601,332 33.7% 478,571 31.8% 44.5 39.2% 122,761 7.76
Storage 578,521 32.4% 482,271 32.1% 26.4 23.2% 96,250 4.57
Production 372,855 20.9% 353,131 23.5% 20.0 17.6% 19,724 4.72
Smartspace 101,915 5.7% 75,461 5.0% 7.9 6.9% 26,454 8.71
Other
(1)
130,653 7.3% 113,663 7.6% 14.9 13.1% 16,990 10.90
Total Germany 1,785,276 100.0% 1,503,097 100.0% 113.7 100.0% 282,179 6.31
UK
Usage
Total
sqm
% of total
sqm
Occupied
sqm
% of occupied
sqm
Annualised
rent roll
€m
(3)
% of annualised
rent roll
Vacant
sqm
Rate psqm
€
(3)
Office 125,390 31.6% 104,470 29.1% 31.5 59.1% 20,920 25.17
Workshop 261,090 65.9% 246,216 68.7% 20.3 38.0% 14,874 6.85
Storage 2,082 0.5% 1,481 0.4% 0.3 0.6% 601 16.82
Other
(2)
7,753 2.0% 6,418 1.8% 1.2 2.3% 1,335 15.86
Total UK 396,315 100.0% 358,585 100.0% 53.3 100.0% 37,730 12.39
(1) Other includes: catering, other usage, residential and technical space, land and car parking.
(2) Other includes: aerials, car parking, retail units, yards, catering and residential.
(3) The Group’s UK business charge licence customers an all inclusive rate, which includes an implicit element of service charge.
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BUSINESS ANALYSIS UNAUDITED INFORMATIONCONTINUED
Lease expiry profile of future minimum lease payments receivable under non-cancellable leases
Germany by income
Office
€000
Production
€000
Storage
€000
Smartspace
€000
Other
(1)
€000
Adjustments
in relation to
lease incentives
€000
Total
€000
Less than 1 year 39,894 19,207 23,930 3,654 12,631 (1,057) 98,259
Between 1 and 5 years 97,553 55,687 60,588 2,364 32,465 (484) 248,173
More than 5 years 21,593 15,922 13,764 71 10,696 (5) 62,041
Total 159,040 90,816 98,282 6,089 55,792 (1,546) 408,473
Germany by sqm
Office
€000
Production
€000
Storage
€000
Smartspace
€000
Other
(1)
€000
Total
sqm
Less than 1 year 133,037 74,472 136,439 63,694 19,436 427,078
Between 1 and 5 years 280,668 213,157 281,559 11,518 70,914 857,816
More than 5 years 64,866 65,502 64,273 249 23,313 218,203
Total 478,571 353,131 482,271 75,461 113,663 1,503,097
(1) Other includes: catering, other usage, residential and technical space, land and car parking.
UK by income
Office
€000
Workshop
€000
Storage
€000
Other
(2)
€000
Adjustments
in relation to
lease incentives
€000
Total
€000
Less than 1 year 7,500 4,442 69 379 — 12,390
Between 1 and 5 years 10,490 8,709 — 9 — 19,208
More than 5 years 6,469 5,010 — 1,378 — 12,857
Total 24,459 18,161 69 1,766 — 44,455
UK by sqm
Office
€000
Workshop
€000
Storage
€000
Other
(2)
€000
Total
sqm
Less than 1 year 81,962 172,694 1,481 6,416 262,553
Between 1 and 5 years 16,184 58,852 — — 75,036
More than 5 years 6,324 14,670 — 2 20,996
Total 104,470 246,216 1,481 6,418 358,585
(2) Other includes: aerials, car parking, retail units, yards, catering and residential.
The Group’s UK business provides flexible leases that represent approximately 75% of annualised rent roll and conventional leases
that represent 25% of annualised rent roll.
Escalation profile per usage
Germany
The Group’s German business’ primary source of revenue relates to leasing contracts with tenants. The Group’s German business
realises escalations as a result of renewals, inflation linked indexations and contractually agreed uplifts. Approximately 33.4% of
contracts in place at 31 March 2022 are subject to contractual uplifts. The average contractual uplift over the coming twelve months
split by usage is detailed as follows:
Usage Increase in %
Office 3.30%
Storage 2.99%
Production 3.20%
Smartspace 2.18%
Other
(1)
10.42%
Total 3.27%
(1) Other includes: catering, other usage, residential and technical space, land and car parking.
Strategic report Governance Financial statements
179
Sirius Real Estate Limited Annual Report and Accounts 2022
Escalation profile per usage continued
UK
The Group’s UK business’ primary source of revenue relates to leasing contracts and licence fee agreements with tenants.
TheGroup’s UK business realises escalations as a result of renewals, inflation linked indexations and contractually agreed uplifts.
Ofthe lease contracts in place at 31 March 2022, approximately 12.8% are subject to contractual uplifts. The average contractual
lease contract uplifts over the coming twelve months split by usage is detailed twelve follows:
Usage Increase in %
Office 9.80%
Workshop 10.86%
Total 10.04%
Property profile March 2022*
Germany
Property and location
Total
sqm
Office
sqm
Storage
sqm
Production
sqm
Other
(1)
sqm
Rate psqm
€
Rostock 18,632 8,228 1,569 6,606 2,229 6.13
Hanover 22,850 8,850 3,923 6,431 3,646 6.28
Mahlsdorf 29,333 11,592 10,796 1,963 4,982 7.79
Mahlsdorf II 12,736 5,765 1,262 1,906 3,803 7.55
Magdeburg 29,993 10,704 9,779 4,210 5,300 5.19
Gartenfeld 25,396 5,107 11,029 3,297 5,963 8.52
Neuruppin 22,959 1,403 7,629 13,133 794 5.10
Potsdam 35,864 12,372 12,555 4,956 5,981 7.47
Schenefeld 40,252 10,265 26,522 1,961 1,504 4.60
Erfurt 23,238 7,586 11,980 — 3,672 3.45
Dresden 57,643 26,191 17,388 10,931 3,133 7.72
Hamburg Lademannbogen 10,277 7,829 1,048 — 1,400 9.84
Buxtehude 28,216 1,120 10,819 13,420 2,857 4.11
Norderstedt 12,627 3,052 7,507 173 1,895 5.32
Neuss 17,589 13,397 1,283 153 2,756 11.99
Bonn 10,586 4,531 2,412 477 3,166 7.88
Bonn – Dransdorf 19,062 5,367 6,882 1,665 5,148 7.19
Aachen I 24,443 12,622 2,324 5,510 3,987 8.75
Aachen II 9,750 1,452 6,600 1,505 193 5.78
Cologne 30,263 2,672 12,578 2,709 12,304 4.93
Wuppertal 14,600 855 5,589 3,613 4,543 4.76
Solingen 13,333 2,475 4,409 4,924 1,525 2.67
Düsseldorf – Sud 21,416 2,814 12,910 1,970 3,722 6.08
Cölln Parc 13,480 6,509 3,371 2,867 733 10.68
Krefeld III 9,668 4,916 3,344 924 484 8.05
Düsseldorf II 9,839 4,433 4,949 — 457 7.66
Oberhausen 82,837 48,064 27,903 1,739 5,131 5.23
Heiligenhaus 44,485 21,999 7,453 12,467 2,566 3.81
Essen II 11,899 8,616 1,829 627 827 7.77
Krefeld II 6,101 2,893 325 2,171 712 7.45
Krefeld 11,322 7,453 2,545 592 732 8.49
Cologne Porz 21,087 15,083 2,416 279 3,309 11.39
Bochum 55,793 12,762 35,970 3,965 3,096 4.54
Bochum II 4,318 3,502 479 12 325 8.70
Neuss II 33,357 8,498 17,210 6,058 1,591 4.50
180
Sirius Real Estate Limited Annual Report and Accounts 2022
BUSINESS ANALYSIS UNAUDITED INFORMATIONCONTINUED
Property and location
Total
sqm
Office
sqm
Storage
sqm
Production
sqm
Other
(1)
sqm
Rate psqm
€
Essen 15,259 6,040 6,241 2,367 611 6.03
Mannheim II 14,551 6,555 4,122 586 3,288 6.01
Mannheim III 3,035 2,278 740 — 17 6.65
Neu-Isenburg 8,250 5,752 1,244 — 1,254 9.78
Mannheim 68,695 13,102 22,215 27,139 6,239 5.16
Maintal 36,999 7,231 14,718 8,289 6,761 6.44
Maintal Mitte 11,023 462 4,523 5,685 353 4.11
Offenbach I 15,044 3,641 2,414 2,351 6,638 6.31
Pfungstadt 32,662 6,707 12,300 9,786 3,869 5.37
Kassel 8,142 3,312 683 3,875 272 5.55
Offenbach Carl Legien-Strasse 45,175 9,761 9,307 17,649 8,458 5.60
Frankfurt Röntgenstraße 5,496 3,957 444 36 1,059 11.62
Saarbrücken 46,827 30,116 10,012 820 5,879 8.42
Alzenau 66,511 27,681 7,450 24,087 7,293 6.55
Frankfurt III 10,320 7,849 1,391 — 1,080 13.06
Friedrichsdorf 17,536 6,793 5,250 2,763 2,730 6.98
Dreieich 12,886 7,404 2,929 — 2,553 7.84
Frankfurt 4,260 2,260 484 68 1,448 10.72
Wiesbaden 18,364 14,334 1,369 — 2,661 14.04
Ludwigsburg 28,233 7,522 9,788 3,837 7,086 6.25
Nuremberg 14,101 2,323 3,241 7,532 1,005 6.90
Heidenheim 46,877 8,240 15,458 13,981 9,198 4.24
Stuttgart – Kirchheim 57,863 20,109 12,957 18,737 6,060 5.91
Munich – Neuaubing 91,234 15,990 31,880 29,645 13,719 7.49
Nabern II 5,578 1,620 491 2,376 1,091 8.54
Markgröningen 57,673 4,532 30,794 20,341 2,006 3.44
Fellbach 27,055 2,493 16,207 340 8,015 5.33
Fellbach II 9,717 4,724 205 — 4,788 5.78
Öhringen 18,650 1,859 7,425 8,784 582 4.76
Frickenhausen 27,876 6,515 6,534 12,680 2,147 5.50
Freiburg Teningen 20,797 7,151 6,046 5,578 2,022 5.06
Rastatt 19,143 6,565 6,099 6,222 257 n/a
Neckartenzlingen 51,577 15,755 18,842 14,087 2,893 4.39
Grasbrunn 14,274 7,269 4,743 — 2,262 11.42
Hallbergmoos 18,349 12,453 3,388 — 2,508 9.86
Total 1,785,276 601,332 578,521 372,855 232,568 6.31
Property profile March 2022* continued
Germany continued
Strategic report Governance Financial statements
181
Sirius Real Estate Limited Annual Report and Accounts 2022
Property profile March 2022* continued
UK
Property and location
Total
sqm
Office
sqm
Workshop
sqm
Storage
sqm
Other
(2)
sqm
Rate psqm
€
(3)
Albion Mills Business Centre 15,136 5,537 5,936 840 2,823 8.59
Altrincham 4,498 1,353 3,058 — 87 18.86
Ashford 1,823 1,823 — — — 39.04
Barnsley 6,637 545 5,930 — 162 7.72
Basingstoke 11,086 10,957 26 — 103 24.22
Birmingham – Tyseley 12,643 924 10,124 1,242 353 8.50
Bradford – Dudley Hill 10,998 810 10,170 — 18 7.34
Bristol – Equinox 1,304 1,303 — — 1 41.68
Bury 3,911 3,911 — — — 14.31
Camberwell – Lilford 3,224 1,361 1,788 — 75 15.37
Camberwell – Lomond 2,004 1,224 757 — 23 32.71
Cardiff 4,110 4,110 — — — 29.67
Cheadle 1,666 1,637 — — 29 36.73
Christchurch 2,663 2,058 605 — —
28.37
Consett 3,094 — 3,094 — —
4.69
Coventry 1,622 1,622 — — —
17.51
Design Works 4,921 3,521 1,325 — 75
15.03
Didcot 1,021 510 510 — 1
29.96
Dinnington 3,647 999 2,648 — —
9.81
Doncaster 3,106 3,052 12 — 42
22.20
Dorking 2,148 1,406 715 — 27
40.79
Egham 996 926 69 — 1 31.11
Fareham 1,758 1,758 — — — 45.08
Gateshead 13,160 — 11,965 — 1,195 3.32
Gloucester 21,411 3,143 18,149 — 119 5.49
Gloucester – Barnwood 3,402 3,378 24 — — 35.08
Hartlepool – Oakesway 2,585 — 2,585 — —
2.57
Hebburn 5,463 — 5,462 — 1
7.00
Hemel Hempstead 4,381 4,380 — — 1
28.69
Hooton 1,383 1,230 152 — 1 23.63
Hove 2,963 2,194 732 — 37 29.51
Huddersfield – Linthwaite 2,365 — 2,364 — 1 7.00
Ipswich 7,155 7,155 — — — —
Leeds – Brooklands 2,133 2,042 32 — 59 20.61
Leeds – Wortley 3,734 — 3,733 — 1 6.65
Letchworth 3,090 2,427 661 — 2
14.55
Littlehampton 1,998 1,998 — — —
37.13
London – Colney 1,804 1,767 36 — 1
28.13
M25 Business Centre 3,285 2,154 1,084 — 47
35.87
Maidstone 1,644 1,643 — — 1
37.45
Manchester – Trafford Park 8,695 — 8,694 — 1 8.33
Manchester – Newton Heath 5,884 2,348 3,393 — 143 14.49
Manchester – Old Trafford 4,577 1,344 3,091 — 142 22.79
Milton Keynes 3,654 3,592 14 — 48 27.39
182
Sirius Real Estate Limited Annual Report and Accounts 2022
BUSINESS ANALYSIS UNAUDITED INFORMATIONCONTINUED
Property and location
Total
sqm
Office
sqm
Workshop
sqm
Storage
sqm
Other
(2)
sqm
Rate psqm
€
(3)
New Addington – Croydon 6,540 381 6,158 — 1 13.28
Newcastle – Amber Court 4,297 4,297 — — — 20.19
Northampton – K2 4,706 74 4,631 — 1 11.71
Northampton – KG 12,911 910 11,952 — 49 8.86
Nottingham – Arnold 5,444 1,373 4,057 — 14 8.68
Nottingham – Park Row 4,459 4,409 — — 50 23.60
Nottingham – Roden 5,291 9 5,252 — 30 7.01
Oldham – Hollinwood 5,525 5,447 49 — 29 20.72
Perivale 2,132 526 1,605 — 1 27.91
Peterlee 18,603 — 18,602 — 1 3.93
Poole 6,735 6,586 — — 149 25.22
Preston 5,340 1,855 3,484 — 1 14.82
Rochdale – Fieldhouse 22,903 483 22,418 — 2 3.69
Rochdale – Moss Mill 16,321 14 16,244 — 63 3.96
Rotherham 4,504 1,361 3,112 — 31 12.84
Sandy Business Park 9,261 108 9,152 — 1 8.08
Sheffield – Cricket 1,928 — 1,928 — — 8.53
Shipley 2,238 2,238 — — — 12.95
Solihull 1,715 1,715 — — — 49.25
Stanley 3,776 — 3,776 — — 5.12
Stoke 5,119 — 5,118 — 1 6.49
Sunderland – North Sands 2,819 2,818 — — 1 16.75
Swindon 6,834 339 6,420 — 75 14.04
Theale 2,857 2,800 — — 57 53.99
Wakefield 20,634 620 18,443 — 1,571 4.46
Warrington – Craven Court 3,830 — 3,830 — — 9.71
Wimbledon 3,031 1,459 1,569 — 3 37.60
Wolverhampton – Willenhall 4,935 581 4,352 — 2 8.92
Total 403,470 132,545 261,090 2,082 7,753 12.39
* Excluding commercial leased investment properties.
(1) Other includes: Smartspace, catering, other usage, residential and technical space, land and car parking.
(2) Other includes: aerials, car parking, retail units, yards, catering and residential.
(3) The Group’s UK business charge licence customers an all inclusive rate, which includes an implicit element of service charge.
Property profile March 2022* continued
UK continued
Strategic report Governance Financial statements
183
Sirius Real Estate Limited Annual Report and Accounts 2022
Basis of preparation
The Directors of Sirius Real Estate Limited (“Sirius”) have chosen to disclose additional non-IFRS measures; these include EPRA
earnings, adjusted net asset value, EPRA net reinstatement value, EPRA net tangible assets, EPRA net disposal value, adjusted profit
before tax and funds from operations (collectively “Non-IFRS Financial Information”).
The Directors have chosen to disclose:
» EPRA earnings in order to assist in comparisons with similar businesses in the real estate sector. EPRA earnings is a definition
ofearnings as set out by the European Public Real Estate Association. EPRA earnings represents earnings after adjusting for
therevaluation of investment properties, changes in fair value of derivative financial instruments, gains and losses on disposals
ofproperties (including tax), recoveries from prior disposals of subsidiaries refinancing costs, goodwill impairment, acquisition
costs in relation to business combinations, exit fees and prepayment penalties (collectively the “EPRA earnings adjustments”),
deferred tax in respect of the EPRA earnings adjustments, NCI relating to gain onrevaluation and gain on sale of properties
(including tax), revaluation gain on investment property relating to associates and therelated tax thereon. The reconciliation
between basic and diluted earnings and EPRA earnings is detailed in table A below.
» Adjusted net asset value in order to assist in comparisons with similar businesses. Adjusted net asset value represents net asset
value after adjusting for derivative financial instruments at fair value and deferred tax relating to valuation movements, derivative
financial instruments and LTIP valuation. The reconciliation for adjusted net asset value is detailed in table B below.
» EPRA net reinstatement value (“EPRA NRV”) in order to assist in comparisons with similar businesses in the real estate sector.
EPRA NRV is a definition of net asset value as set out by the European Public Real Estate Association. EPRA NRV represents net
asset value after adjusting for derivative financial instruments at fair value, deferred tax relating to valuation movements and
derivatives and real estate transfer tax presented in the Valuation Certificate (for the entire consolidated Group including wholly
owned entities and investment in associates). The reconciliation for EPRA NRV is detailed in table C below.
» EPRA net tangible assets (“EPRA NTA”) in order to assist in comparisons with similar businesses in the real estate sector. EPRA
NTA is a definition of net asset value as set out by the European Public Real Estate Association. EPRA NTA represents net asset
value after adjusting for derivative financial instruments at fair value, deferred tax relating to valuation movements (excluding
thatrelating to assets held for sale) and derivatives, goodwill and intangible assets as per the note reference in the consolidated
statement of financial position (for the entire consolidated Group including wholly owned entities and investment in associates).
The reconciliation for EPRA NTA is detailed in table C below.
» EPRA net disposal value (“EPRA NDV”) in order to assist in comparisons with similar businesses in the real estate sector. EPRA
NDV is a definition of net asset value as set out by the European Public Real Estate Association. EPRA NDV represents net asset
value after adjusting for goodwill as per the note reference in the consolidated statement of financial position and the fair value
offixed interest rate debt (for the entire consolidated Group including wholly owned entities and investment in associates).
Thereconciliation for EPRA NDV is detailed in table C below.
» Adjusted profit before tax in order to provide an alternative indication of Sirius Real Estate Limited and its subsidiaries’ (the “Group”)
underlying business performance. Accordingly, it excludes the effect of the gain on revaluation of investment properties, goodwill
impairment, other adjusting items, gains/losses on sale of properties, change in fair value of financial derivatives, recoveries from
prior disposals of subsidiaries revaluation gain on investment property relating to associates and related tax and includes the
deficit on revaluation relating to leased investment properties. The reconciliation for adjusted profit before tax is detailed in table D
below.
» Funds from operations in order to assist in comparisons with similar businesses and to facilitate the Group’s dividend policy which
is derived from funds from operations. Accordingly, funds from operations excludes depreciation and amortisation (excluding
depreciation relating to IFRS 16), net foreign exchange differences, amortisation of financing fees, adjustment in respect of IFRS
16 and current tax excluding tax ondisposals. The reconciliation for funds from operations is detailed in table D below.
The Non-IFRS Financial Information is presented in accordance with the JSE Listing Requirements and the guide on pro forma
financial information issued by SAICA. The Non-IFRS Financial Information is the responsibility of the Directors. The Non-IFRS
Financial Information has been presented for illustrative purposes and, due to its nature, may not fairly present the Group’s financial
position or result of operations.
Ernst & Young Inc have issued a reporting accountant report on the Non-IFRS Financial Information for the year ended 31 March 2022
which is available for inspection at the Group’s registered office. The starting point for all the Non-IFRS Financial Information has been
extracted from the Group’s consolidated financial statements for the year ended 31 March 2022 (the “consolidated financial statements”).
184
Sirius Real Estate Limited Annual Report and Accounts 2022
ANNEX 1 NONIFRS MEASURES
Basis of preparation continued
Table A – EPRA earnings
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Basic and diluted earnings attributable to owners of the Company
(1)
147,873 147,451
Gain on revaluation of investment properties
(2)
(140,884) (99,585)
Add loss on disposal of properties (including tax)
(3)
623 33
Deduct recoveries from prior disposals of subsidiaries
(4)
(94) (65)
Refinancing costs, exit fees and prepayment penalties
(5)
7,821 —
Goodwill impairment
(6)
40,906 —
Acquisition costs in relation to business combinations
(7)
5,299 —
Change in fair value of derivative financial instruments
(8)
(996) (136)
Deferred tax in respect of EPRA earnings adjustments
(9)
14,827 14,180
NCI in respect of the above
(10)
85 82
Deduct revaluation gain on investment property relating to associates
(11)
(6,021) (4,199)
Tax in relation to the revaluation gain on investment property relating to associates
(12)
1,256 872
EPRA earnings
(13)
70,695 58,633
Notes:
(1) Presents the profit attributable to owners of the Company which has been extracted from the consolidated income statement within the
consolidated financial statements.
(2) Presents the gain on revaluation of investment properties which has been extracted from the consolidated income statement within the
consolidated financial statements.
(3) Presents the gain or loss on disposal of properties (including tax) which has been extracted from note 11 within the consolidated financial
statements.
(4) Presents the recoveries from prior disposals of subsidiaries which has been extracted from the consolidated income statement within the
consolidated financial statements.
(5) Presents the refinancing costs, exit fees and prepayment penalties which have been extracted from note 10 within the consolidated financial
statements.
(6) Presents the goodwill impairment which has been extracted from the consolidated income statement within the consolidated financial
statements (2021: €nil).
(7) Presents the acquisition costs in relation to business combinations which have been extracted from note 4 within the consolidated financial
statements (2021: €nil).
(8) Presents the change in fair value of derivative financial instruments which has been extracted from the consolidated income statement within the
consolidated financial statements.
(9) Presents deferred tax relating to origination and reversal of temporary differences of the EPRA earnings adjustments which has been extracted
from note 11 within the consolidated financial statements.
(10) Presents the non-controlling interest relating to gain on revaluation and gain or loss on disposal of properties (including tax) which has been
extracted from note 12 within the consolidated financial statements.
(11) Presents the revaluation gain on investment property relating to associates which has been extracted from note 12 within the consolidated
financial statements.
(12) Presents tax in relation to the revaluation gain on investment property relating to associates which has been extracted from note 12 within the
consolidated financial statements.
(13) Presents the EPRA earnings for the year.
Table B – Adjusted net asset value
31 March 2022
€000
31 March 2021
€000
Net asset value
Net asset value for the purpose of assets per share (assets attributable to the owners of the Company)
(1)
1,190,652 926,533
Deferred tax liabilities/(assets) (see note 11)
(2)
75,893 56,331
Derivative financial instruments at fair value
(3)
(329) 1,141
Adjusted net asset value attributable to owners of the Company
(4)
1,266,216 984,005
Notes:
(1) Presents the net asset value for the purpose of assets per share (assets attributable to the owners of the Company) which has been extracted from
the consolidated statement of financial position within the consolidated financial statements.
(2) Presents deferred tax liabilities which have been extracted from the consolidated statement of financial position within the consolidated
financialstatements.
Strategic report Governance Financial statements
185
Sirius Real Estate Limited Annual Report and Accounts 2022
Basis of preparation continued
Table B – Adjusted net asset value continued
Notes continued
(3) Presents current derivative financial instrument assets of €329,000 (2021: €70,000) less current derivative financial instrument liabilities
of€nil(2021: €414,000) less non-current derivative financial instrument liabilities of €nil (2021: €797,000) which have been extracted from
theconsolidated statement of financial position within the consolidated financial statements.
(4) Presents the adjusted net asset value attributable to the owners of the Company as at year end.
Table C – EPRA net asset measures
31 March 2022
EPRA NRV
€000
EPRA NTA
€000
EPRA NDV
€000
Net asset value as at year end (basic)
(1)
1,190,652 1,190,652 1,190,652
Diluted EPRA net asset value at fair value 1,190,652 1,190,652 1,190,652
Group
Derivative financial instruments at fair value
(2)
(329) (329) n/a
Deferred tax in respect of EPRA earnings adjustments
(3)
75,893 75,566* n/a
Goodwill as per note 17
(4)
n/a — —
Intangibles as per note 17
(5)
n/a (4,283) n/a
Fair value of fixed interest rate debt
(6)
n/a n/a (22,229)
Real estate transfer tax
(7)
160,692 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments
(3)
6,563 6,563* n/a
Fair value of fixed interest rate debt
(6)
n/a n/a 2,196
Real estate transfer tax
(7)
9,147 n/a n/a
Total EPRA NRV, NTA and NDV
(8)
1,442,618 1,268,169 1,170,619
31 March 2021
EPRA NRV
€000
EPRA NTA
€000
EPRA NDV
€000
Net asset value as at year end (basic)
(1)
926,533 926,533 926,533
Diluted EPRA net asset value at fair value 926,533 926,533 926,533
Group
Derivative financial instruments at fair value
(2)
1,141 1,141 n/a
Deferred tax in respect of EPRA earnings adjustments
(3)
56,331 56,331 * n/a
Goodwill as per note 17
(4)
n/a (3,738) (3,738)
Intangibles as per note 17
(5)
n/a (2,830) n/a
Fair value of fixed interest rate debt
(6)
n/a n/a (3,556)
Real estate transfer tax
(7)
106,274 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments
(3)
5,212 5,212* n/a
Fair value of fixed interest rate debt
(6)
n/a n/a (1,772)
Real estate transfer tax
(7)
6,772 n/a n/a
Total EPRA NRV, NTA and NDV
(8)
1,102,263 982,649 917,467
* The Company intends to hold and does not intend in the long term to sell any of the investment properties and has excluded such deferred taxes
for the whole portfolio as at year end except for deferred tax in relation to assets held for sale.
Notes:
(1) Presents the net asset value for the purpose of assets per share (assets attributable to the owners of the Company) which has been extracted from
the consolidated statement of financial position within the consolidated financial statements.
(2) Presents current derivative financial instrument assets of €329,000 (2021: €70,000) less current derivative financial instrument liabilities of
€nil(2021: €414,000) less non-current derivative financial instrument liabilities of €nil (2021: €797,000) which have been extracted from the
consolidated statement of financial position within the consolidated financial statements.
(3) Presents for the Group the deferred tax liabilities which have been extracted from note 11 within the consolidated financial statements and for
EPRA NTA only the additional credit adjustment for the deferred tax expense relating to assets held for sale of €327,000 (2021: €nil). For investment
in associates the deferred tax expense arising on revaluation gains amounted to €6,563,000 (2021: €5,212,000).
(4) Presents the net book value of goodwill which has been extracted from note 17 within the consolidated financial statements.
(5) Presents the net book value of software and licences with definite useful life which has been extracted from note 17 within the consolidated
financialstatements.
186
Sirius Real Estate Limited Annual Report and Accounts 2022
ANNEX 1 NONIFRS MEASURES CONTINUED
Basis of preparation continued
Table C – EPRA net asset measures continued
Notes continued
(6) Presents the fair value of financial liabilities and assets on the statement of financial position, net of any related deferred tax.
(7) Presents the add-back of purchasers’ costs in order to reflect the value prior to any deduction of purchasers’ costs, as shown in the Valuation
Certificate of Cushman & Wakefield LLP.
(8) Presents the EPRA NRV, EPRA NTA and EPRA NDV, respectively, as at year end.
Table D – Adjusted profit before tax and funds from operations
Year ended
31 March 2022
€000
Year ended
31 March 2021
€000
Reported profit before tax
(1)
168.9 163.7
Adjustments for:
Gain on revaluation of investment properties
(2)
(140.9) (99.6)
Deficit on revaluation relating to leased investment properties
(3)
(5.6) (4.3)
Loss/(gain) on disposals of properties
(4)
0.6 (0.1)
Recoveries from prior disposals of subsidiaries
(5)
(0.1) (0.1)
Deduct revaluation gain on investment property from associates and related tax
(6)
(4.8) (3.3)
Other adjusting items
(7)
19.1 4.1
Goodwill impairment
(8)
40.9 —
Change in fair value of financial derivatives
(9)
(1.0) (0.1)
Adjusted profit before tax
(10)
77.1 60.3
Adjustments for:
Foreign exchange effects
(11)
(1.9) —
Depreciation and amortisation (excluding depreciation relating to IFRS 16)
(12)
2.3 1.6
Amortisation of financing fees
(13)
2.6 1.7
Adjustment in respect of IFRS 16
(14)
0.6 (0.9)
Current taxes incurred (see note 11)
(15)
(6.1) (1.9)
Add back current tax relating to disposals
(16)
— 0.1
Funds from operations
(17)
74.6 60.9
Notes:
(1) Presents profit before tax which has been extracted from the consolidated income statement within the consolidated financial statements.
(2) Presents the gain on revaluation of investment properties which has been extracted from the consolidated income statement within the
consolidated financial statements.
(3) Presents the deficit on revaluation relating to capitalised head leases which has been extracted from note 14 within the consolidated
financialstatements.
(4) Presents the gain or loss on disposal of properties which has been extracted from the consolidated income statement within the consolidated
financial statements.
(5) Presents the recoveries from prior disposals of subsidiaries which has been extracted from the consolidated income statement within the
consolidated financial statements.
(6) Presents the revaluation gain on investment property relating to associates and related tax which has been extracted from note 12 within the
consolidated financial statements.
(7) Presents the total adjusting items which has been extracted from note 12 within the consolidated financial statements.
(8) Presents the goodwill impairment which has been extracted from the consolidated income statement within the consolidated financial statements.
(9) Presents the change in fair value of derivative financial instruments which has been extracted from the consolidated income statement within
theconsolidated financial statements.
(10) Presents the adjusted profit before tax for the year.
(11) Presents the net foreign exchange gains as included in other administration costs in note 7 within the consolidated financial statements (2021: €nil).
(12) Presents depreciation of plant and equipment and amortisation of intangible assets which have been extracted from note 7 within the
consolidated financial statements.
(13) Presents amortisation of capitalised finance costs which has been extracted from note 10 within the consolidated financial statements.
(14) Presents the differential between the expense recorded in the consolidated income statement for the year relating to head leases in accordance
with IFRS 16 amounting to €6.9 million (2021: €5.1 million) and the actual cash expense recorded in the consolidated statement of cash flows for
the year amounting to €6.3 million (2021: €6.0 million).
(15) Presents the total current income tax which has been extracted from note 11 within the consolidated financial statements.
(16) Presents the current income tax charge relating to disposals of investment properties which has been extracted from note 11 within the
consolidated financial statements.
(17) Presents the funds from operations for the year.
Strategic report Governance Financial statements
187
Sirius Real Estate Limited Annual Report and Accounts 2022
Adjusted earnings is the earnings attributable to the owners of the Company, excluding the effect of adjusting items
net of related tax, gains/losses on sale of properties net of related tax, the revaluation deficits/
surpluses on the investment properties (also to associates) net of related tax, profits and losses on
disposals of properties net of related tax, changes in fair value of derivative financial instruments net
of related tax, recoveries from prior disposals of subsidiaries net of related tax, finance
restructuring costs net of related tax and adjustment on revaluation expense relating to leased
investment properties
Adjusted net asset value is the assets attributable to the equity owners of the Company adjusted for derivative financial
instruments at fair value and deferred tax arising on revaluation gain, derivative financial
instruments and LTIP valuation
Adjusted profit before tax is the reported profit before tax adjusted for gain on revaluation of investment properties, gains/
losses on sale of properties, changes in fair value of derivative financial instruments, other
adjusting items, goodwill impairment, recoveries from prior disposals of subsidiaries revaluation
gain on investment property relating to associates and related tax
Annualised acquisition net
operating income
is the income generated by a property less directly attributable costs at the date of acquisition
expressed in annual terms. Please see “annualised rent roll” definition below for further
explanatory information
Annualised acquisition
rent roll
is the contracted rental income of a property at the date of acquisition expressed in annual terms.
Please see “annualised rent roll” definition below for further explanatory information
Annualised rent 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 2022. Annualised rent roll should
not be interpreted nor used as a forecast or estimate. Annualised rent roll differs from rental
income described in note 5 of the Annual Report and reported within revenue in the consolidated
income statement for reasons including:
» annualised rent roll represents contracted rental income at a specific point in time expressed
inannual terms;
» rental income as reported within revenue represents rental income recognised in the period
under review; and
» rental income as reported within revenue includes accounting adjustments including those
relating to lease incentives
Capital value is the market value of a property divided by the total sqm of a property
Cumulative total 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 the revaluation of investment properties, changes in fair value of
derivative financial instruments, gains and losses on disposals of properties (net of related tax),
recoveries from prior disposals of subsidiaries (net of related tax), refinancing costs, goodwill
impairment, acquisition costs in relation to business combinations, exit fees and prepayment
penalties (collectively the “EPRA earnings adjustments”), deferred tax in respect of the EPRA
earnings adjustments, NCI relating to gain on revaluation and gain on sale of properties net of
related tax, revaluation gain on investment property relating to associates and the related tax
thereon
EPRA net reinstatement value is the net asset value after adjusting for derivative financial instruments at fair value, deferred tax
relating to valuation movements and derivatives and real estate transfer tax presented in the
Valuation Certificate, including the amounts of the above related to the investment in associates
EPRA net tangible assets is the net asset value after adjusting for derivative financial instruments at fair value, deferred tax
relating to valuation movements (just for the part of the portfolio that the Company intends to hold
should be excluded) and derivatives, goodwill and intangible assets as per the note reference in
the consolidated statement of financial position, including the amounts of the above related to the
investment in associates
EPRA net disposal value is the net asset value after adjusting for goodwill as per the note reference in the consolidated
statement of financial position and the fair value of fixed interest rate debt, including the amounts
of the above related to the investment in associates
EPRA net initial yield is the annualised rent roll based on the cash rents passing at the statement of financial position
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
188
Sirius Real Estate Limited Annual Report and Accounts 2022
GLOSSARY OF TERMS
ERV is the estimated rental value which is the annualised rental income at 100% occupancy
Funds from operations is adjusted profit before tax adjusted for depreciation and amortisation (excluding depreciation
relating to IFRS 16), amortisation of financing fees, net foreign exchange gains, adjustment in
respect of IFRS 16 and current tax excluding tax on disposals
Geared IRR is an estimate of the rate of return taking into consideration debt
Gross loan to value ratio is the ratio of principal value of total debt to the aggregated value of investment property
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
investment (geared)
is an estimate of the rate of return based on operating cash flows and taking into considerationdebt
Operating cash flow on
investment (ungeared)
is an estimate of the rate of return based on operating cash flows
Operating profit is the net operating income adjusted for gain on revaluation of investment properties, loss on
disposal of properties, recoveries from prior disposals of subsidiaries, administrative expenses,
goodwill impairment and share of profit of associates
Rate for the German portfolio is rental income per sqm expressed on a monthly basis as at a specific
reporting date
for the UK portfolio is rental income (includes estimated service charge element) per sqm
expressed on a monthly basis as at a specific reporting date in Euro
for the UK portfolio is rental income (includes estimated service charge element) per sq ft
expressed on an annual basis as at a specific reporting date in GBP
Senior Management Team as set out on page 70 of the Group’s Annual Report and Accounts 2022
Total debt is the aggregate amount of the Company’s interest-bearing loans and borrowings
Total shareholder
accountingreturn
is the return obtained by a shareholder calculated by combining both movements in adjusted
NAVper share and dividends paid
Total return is the return for a set period of time combining valuation movement and income generated
Ungeared IRR is an estimate of the rate of return
Weighted average cost of debt is the weighted effective rate of interest of loan facilities expressed as a percentage
Weighted average debt expiry is the weighted average time to repayment of loan facilities expressed in years
Strategic report Governance Financial statements
189
Sirius Real Estate Limited Annual Report and Accounts 2022
190
Sirius Real Estate Limited Annual Report and Accounts 2022
CORPORATE DIRECTORY
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
Registered office
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
Registered number
Incorporated in Guernsey under the Companies (Guernsey)
Law, 2008, as amended, under number 46442
Company Secretary
A Gallagher
Sirius Real Estate Limited
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
UK solicitors
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
United Kingdom
Financial PR
FTI Consulting LLP
200 Aldersgate Street
London EC1A 4HD
United Kingdom
JSE sponsor
PSG Capital Proprietary Limited
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch 7600
South Africa
Joint broker
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
United Kingdom
Joint broker
Berenberg
60 Threadneedle Street
London EC2R 8HP
United Kingdom
Property valuer
Cushman & Wakefield LLP
Rathenauplatz 1
60313 Frankfurt am Main
Germany
Independent auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
United Kingdom
Guernsey solicitors
Carey Olsen
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Channel Islands
Discover more online
sirius-real-estate.com
Sirius Real Estate
Follow our business on LinkedIn.
@SiriusRE
Follow our corporate news feeds on Twitter.
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Sirius Real Estate Limited’s commitment to environmental issues is reflected in this
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Sirius Real Estate Limited
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
www.sirius-real-estate.com
Sirius Real Estate Limited Annual Report and Accounts 2022