Half Yearly Report

RNS Number : 0009X

Sirius Real Estate Limited

14 November 2014

 



Sirius Real Estate Limited

("Sirius", "the Group" or "the Company")

Half Year Results for the six months ended 30 September 2014

"Trading during the first six months has continued positively and the implementation of an enhanced dividend policy and intensive capex programme reflects the Company's significantly improved financial position. The Board anticipates a good set of results for the full year." said Robert Sinclair, Chairman of Sirius.

Financial highlights

·          Continued demand for Sirius' workspace helped gross annualised rent roll level increase 1.9% in the six month period to €42.2m (31 March 2014: €41.4m°)

·          Recurring profit before tax increased to €5.1m* (2013: €5.0m*). Profit before tax (including property revaluations) of €15.3m (2013: €11.0m)

·          Funds From Operations ('FFO')* increased to €6.2m (2013: €5.9m*) and FFO per share 1.2c (2013: 1.8c). The reduction in FFO per share reflects the impact of the capital raisings in August and December 2013, resulting in a higher number of shares in issue

⋅             Valuation of the portfolio increased by €15.9 million or 3.6% to €463.6m (31 March 2014: €447.7m^) in the six month period 

⋅             Adjusted Net Asset Value** per share increased by 6.8% to 47.3c (31 March 2014: 44.3c)

⋅             Loan to value ('LTV') ratio reduced to 48% (31 March 2014: 51%) showing good progress towards the 40% LTV target

⋅             Achieved new lettings in the period of 54,713 sqm at an average rate of €5.54 per sqm, 22% above the average rate of €4.53 per sqm being achieved on the portfolio

⋅             Average rental rate per sqm per month increased from €4.46° at 31 March 2014 to €4.53 at 30 September 2014

Enhanced Dividend Policy

⋅             Announced the establishment of an enhanced dividend policy to pay to shareholders 65% of FFO on a semi-annual basis; effectively a 27% increase in the dividend pay-out from the previous policy

⋅             Dividend of 0.77c per share declared for the six months to 30 September 2014, with a scrip dividend alternative, payable on 31 December 2014.  Ex-dividend date of 27 November 2014 and record date of 28 November 2014

* Adjusted. See Note 21 of Notes to the Financial Statements for explanation.

^ Adjusted for disposals

° Smartspace all-inclusive rents adjusted by €180k to allocate actual service charge costs to service charge income rather than estimated. This is now like-for-like with the September 2014 position.

** Excluding provisions for deferred tax and financial derivatives

Capex Programme

⋅             In June 2014, the Company announced a new 2 year €9 million capital investment programme aimed at transforming around 100,000 sqm of previously unlettable or under-rented space into a combination of conventional space and the Company's premium, high-quality Smartspace products, aimed at creating an Estimated Rental Value €5 million

⋅             The Company has completed the first 29,441 sqm of this capital investment programme with an investment spend coming in slightly lower than budget.  The completed space has only been on the market for a short period of time and the rental rates achieved so far are higher than expected

Disposals

·           34,800 sqm of non-income producing land disposed of for €4.55 million*

·           105,000 sqm of non-income producing land and two non-core low income producing sites identified or available for potential sale

* € 2.24m completed in the six months to 30 September 2014 and €2.21m completed in November 2014

Robert Sinclair, Chairman of Sirius, said, "The Company continues to be successful in identifying and executing the disposal of surplus land, which along with the Company's existing cash generation, will comfortably fund the capital investment programme, whilst also allowing an enhanced dividend policy. The capital investment programme is already producing increasing levels of profitability for the Company. With a strong financial platform to work from and further benefits from the capital investment programme to come, the Board is confident that Sirius will deliver significant value to shareholders." 

Enquiries:

Sirius                         

Andrew Coombs, Chief Executive Officer                         [phone]

Alistair Marks, Chief Financial Officer                              [phone]

Peel Hunt

Capel Irwin                                                                    020 7418 8900

Hugh Preston

Finncap

Stuart Andrews                                                              020 7220 0500

Paul Harrington

Novella                                           

Tim Robertson                                                               020 3151 7008

Ben Heath

www.sirius-real-estate.com 

Business Update

Introduction

The Company is pleased to announce the half-year results of Sirius Real Estate Limited for the six months ended 30 September 2014. With the capital restructuring complete and further disposals executed, the Company is now focused on extracting full value from a more streamlined portfolio with lower levels of debt.

An enhanced dividend policy has been implemented and the intensive capital investment programme aimed at delivering organic growth is well under way. The results of this initiative to date are very encouraging particularly given that it is being largely funded with the proceeds from disposals of excess, non-income producing land on various parks.  

We saw a further uplift in the value of our property portfolio in the period, with the entire portfolio valued at €463.6 million as at 30 September 2014 (31 March 2014: €447.7 million*), an increase of €15.9 million or 3.6% in the six month period. The revaluation uplift is encouraging and is largely due to the increase in rent roll and capital expenditure during the period.  We still believe that there remains significant potential for further uplifts in the coming years.

The Board is undertaking a number of initiatives to enhance the profile of the Company and to encourage trading in its shares.  One of these initiatives may, in light of the existing significant South African shareholder base which the Company enjoys, be to obtain a secondary listing on the Johannesburg Stock Exchange and we have recently announced that we have initiated discussions with the JSE and some of our South African shareholders in that regard.  We believe such a listing would be attractive to those shareholders as well as attract additional shareholders, enhancing the liquidity and tradability of our shares.  We shall keep shareholders informed in due course on this and other plans for progress.

* Adjusted for disposals

Earnings

For the half year under review, total income was €21.5 million (2013: €21.7 million^) and profit before tax for the period was €15.3 million (2013: €11.0 million), which includes property revaluations. The recurring profit before tax* reported for the period was €5.1 million (2013: €5.0 million^). We have been able to increase the annualised gross rent roll of the 30 business parks currently owned by 1.9% to €42.2 million (31 March 2014: €41.4 million°) in the six month period. Recovery of service charge costs continues to improve, notwithstanding recovery rates already being well ahead of the occupancy rate.    

Funds From Operations** ('FFO') increased to €6.2m (2013: €5.9m^) and FFO per share was 1.2c (2013: 1.8c^).  Adjusted EPS* was 0.93c as at 30 September 2014 (30 September 2013: 1.53c^). The reduction in FFO and Adjusted EPS is due to the capital raises last year for the bank refinancing resulting in a higher number of shares in issue this year. 

* Excludes property revaluation, related deferred tax, non-controlling interests, profits on disposals, change in fair value of derivative financial instruments and non-recurring items. 

** See Note 21 of Notes to the Financial Statements for explanation.

^ Adjusted for surrender premium and impact of disposed sites

° Smartspace all-inclusive rents adjusted by €180k to allocate actual service charge costs to service charge income rather than estimated. This   is now like-for-like with the September 2014 position.

Net Asset Value

The existing portfolio was independently valued at €463.6 million by Cushman & Wakefield LLP (31 March 2014: €447.7 million*) which converts to a book value of €459.0 million after Directors' write-downs of €2.6 million on the two non-core assets held for sale and a reduction of €2.0 million for the provision for rent-free adjustments as required by IFRS.

The Adjusted Net Asset Value ('Adjusted NAV') per share, which excludes the provisions for deferred tax and derivative financial instruments, was 47.3c as at 30 September 2014, an increase of 6.8% over the 44.3c Adjusted NAV per share at 31 March 2014.

The portfolio valuation represents a 3.6% increase in the six month period. This is the third valuation in succession where values have increased, such increases primarily due to rental income improvements. The €15.9 million valuation uplift translates to a €11.6 million gain in our books driven largely from the deployment of €4.7 million of capital investment and increase in rent roll during the period.  The table below shows how the revaluation gain is calculated.

	€ million
Valuation increase, 30 September 2014	15.9
Less Capex	-4.7
Impairments	0.3
Lease incentives	0.1
Revaluation profit at 30 September 2014	11.6

The core portfolio, which comprises 27 of the 30 assets, is valued at €451.1 million representing an average gross yield of 9.2% (31 March 2014: 9.5%) and a net yield^^ of 8.1% (2013: 8.0%). The average capital value per sqm is €428.4 (31 March 2014: €418.5) which remains significantly below replacement cost.  These indicators highlight the potential value in the core portfolio and even more so given the fact that the core assets operate with an occupancy of only 80% (31 March 2014: 80%). 

We believe that there remains significant potential for further uplifts and realisations in the future. This will not only come from organic rental growth as we continue to push rents higher, but also from the value created through the capital investment programme. We also believe the valuations do not yet fully reflect property level cost reductions achieved over the last few years.  

^^ Net Yield is rental income less service charge irrecoverable costs and landlord maintenance divided by valuation

* Adjusted for disposals

Dividend

In light of the stronger cash generation from the operations, now being enhanced by the capital investment programme, and the cash generated from the disposal of non-income and low-income producing assets, the Board has decided to increase the dividend payable to shareholders. The dividend policy, as announced on 22 September 2014, has therefore been enhanced to 65% of FFO, rather than the previously announced policy which referred to recurring profit after tax.  This is, in effect, a 27% increase in the dividend pay-out from the previous policy. The dividend will be paid semi-annually.

The Company will continue to offer shareholders the ability to receive dividends in scrip rather than cash for which there was a 35% scrip take-up on the dividend recently paid relating to the prior year. The Board declares an interim dividend of 0.77c per share for the period ending 30 September 2014 which will be paid on 31 December 2014.  The ex-dividend date will be 27 November 2014 and the record date 28 November 2014.  Details of the scrip offer will be mailed to shareholders shortly. The latest date to elect to accept the scrip offer is expected to be 15 December 2014.

Operations

Demand for both flexible and conventional workspace has been good from the Company's core German SME customers with new lettings of 54,713 sqm at an average rate of €5.54 per sqm being achieved during the period.  Move-outs were 30,698 sqm.  For the year ended 31 March 2014 we reported new lettings of 113,784 sqm and move-outs of 112,982 sqm, which included 21,674 sqm for a specific scheduled Siemens vacation. Assuming the full year to 31 March 2015 has a similar level of new lettings and move-outs as the prior year, excluding the Siemens move-outs, we would expect approximately a further 60,000sqm each of new lettings and move-outs in the second half.

The primary focus of the management team is now on driving the rental income generated by its core portfolio from which the main growth driver will be the capital expenditure programme.  As previously announced, the Company plans to invest around €9 million over a two year period into transforming approximately 100,000 sqm of previously unlettable or under-rented space into a combination of conventional workspace and Sirius' high-quality Smartspace products. Around 76,000sqm of the space subject to the programme requires major investment and in our 22 September 2014 trading update, the Company informed shareholders of its ability to transform this space under budget with the first 26,818 sqm coming in at an investment spend lower than expected. We are pleased to note that this has continued, with a total of 29,414 sqm of the capital investment programme delivered to the date of this report.  The total additional rental income now created from this programme is €750k which can be illustrated as follows:

Capital Investment Programme Progress	Area	Investment		Rental Increase
				€		Occupancy		Rate
	Sqm	Budget	Actual	Budget	Achieved to Date	Budget	Achieved to Date	Budget	Achieved to Date
Completed	29,441	€2,747,000	€2,346,590	€1,494,746	€750,201	77%	38%	5.49	5.54
In Progress	6,500	€1,378,500		€313,637		72%		5.56
To be Commenced This Financial Year	16,924	€1,811,766		€719,832		73%		4.83
To be Commenced Next Financial Year	23,301	€2,431,000		€1,117,404		78%		5.13
Total	76,166	8,368,266	2,346,590	3,645,619	750,201	76%		5.24

The expectation of this programme is to create an Estimated Rental Value of €5 million and realise at least €3.5 million of this to the Group's rental income as well as reduce its cost of vacancy by around €0.5 million per annum over the next three years. This would represent a material improvement in the Group's profitability.  Given that it is focused on converting previously unusable or under-rented space, which has limited value attributed to it in the property valuations, this investment is also expected to have a significant impact on the value of the portfolio.  This is emphasised by the fact that more than half of the investment to date has been on converting poor quality space into our premium Smartspace products.  Currently these products represent around 7.5% of the total lettable space of the portfolio and we would expect this programme to increase that to 10% or more.

The Smartspace product range (Office, Storage, Flexilager and Workbox) continues to improve in terms of the level of rental rates being achieved.  Smartspace offers highly competitive prices due to the fact that these products are located in former industrial buildings and accordingly demand remains strong.  The price point that we are achieving for Smartspace is up to triple that achieved by the pre-conversion usage and our products are often priced at less than half that of our main competitors.  We continue to manage the mix of space on each business park between flexible Smartspace tenants, long-term blue-chip anchor tenants and mid-term conventional tenants (mainly SMEs). Optimising the mix ensures that we can maximise the yield whilst preserving the covenant quality within each park, so that our assets will always remain attractive from both an investment and a financing perspective.  The table below illustrates the current tenant mix across the portfolio:

	No. of Tenants	Occ Sqm	Annual Rent	Percentage	Rate Per Sqm
Top 50 Tenants	50	477,245	25,595,217	61%	4.47
Other SME Tenants	1,429	264,230	14,060,747	33%	4.43
Smartspace Tenants	949	34,615	2,498,157	6%	6.01
Total	2,428	776,091	42,154,121	100%	4.53

Disposals

In the reporting period we completed the disposal of 7,479 sqm of non-income producing land across sites in Bremen and Bonn generating proceeds of €2.34 million. We also completed the disposal of 27,321 sqm of non-income producing land at a Berlin site in November 2014 generating proceeds of €2.21 million. One non-core unencumbered business park has also been notarised and will generate another €0.3 million. There are two non-core unencumbered business parks available for disposal and a further 105,000 sqm of surplus land also identified as potentially available for disposal. Since these assets produce only a modest contribution to the Company's profits and in the case of the land have only a nominal value attributed to it in the portfolio valuations, recycling the capital and investing in capital investment is expected to produce a high return on investment, both in terms of income and value accretion. In addition to this the Company is looking at selectively recycling a small number of mature assets in non-core locations with new acquisitions in core locations with much better income and capital growth potential.

Finance

As mentioned in our last report we have completed the refinancing of all banking facilities and the Company now has Group borrowings of €227 million, representing a loan to value ratio of 48% on bank debt. The Group has four bank facilities totalling €222 million and a convertible bond with a face value of €5 million. The bank debt has expiries ranging between January 2017 and July 2023 and an average unexpired term of 4.8 years. The first facilities due for renewal are the two Macquarie facilities in January 2017 currently totalling €57 million. The average cost of debt is currently around 4.6% which we believe can be reduced further with the refinancing of the two Macquarie facilities.      

Outlook

Demand for conventional and flexible workspace has remained strong across the Group's 27 core sites and the Company is trading in line with expectations.

We have embarked on a major capital investment programme that, while still in its early stages, has already shown the potential to generate high income and capital value returns. Funding this investment programme with the proceeds from the disposal of non-income producing land and low-income producing non-core sites will further improve total returns to shareholders.

The consistent operational improvement achieved over the last three years as well as the strengthening of the capital structure led to the Board re-commencing dividend payments in June 2014 in connection with the 31 March 2014 financial year. The Board has now enhanced the dividend policy by improving dividend payments to 65% of FFO, reflecting the continuing confidence in the Group's trading performance and cash generation.

With the capital structure stabilised the management has been able to start focusing on enhancing returns from the current portfolio by recycling capital into highly accretive organic investment opportunities in our existing estate where we know there is strong demand for our products. This, together with a continuing improvement in operating performance on the estate, gives us confidence that high total returns, consisting of income and capital value returns, can be achieved in the coming periods.

The Board is confident the Company will deliver a good set of results for the full year and is working hard to generate significant returns for its shareholders.

 

Independent review report

to Sirius Real Estate Limited

Introduction

We have been engaged by Sirius Real Estate Limited ("the Company") to review the unaudited interim condensed set of financial statements of the company and its subsidiaries (together the "Group") in the Interim Report for the six months ended 30 September 2014 which comprises the unaudited consolidated statement of comprehensive income, unaudited consolidated statement of financial position, unaudited consolidated statement of changes in equity, unaudited consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the unaudited interim condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The Interim Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Report in accordance with the AIM Rules.

As disclosed in note 2(a), the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU. The unaudited interim condensed set of financial statements included in this Interim Report has been prepared in accordance with the recognition and measurement requirements of IFRS as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the unaudited interim condensed set of financial statements in the Interim Report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the unaudited interim condensed set of financial statements in the Interim Report for the six months ended 30 September 2014 is not prepared, in all material respects, in accordance with the recognition and measurement requirements of IFRS as adopted by the EU and the AIM Rules.

KPMG Channel Islands Limited

Chartered Accountants

Guernsey

13 November 2014

Unaudited consolidated statement of comprehensive income

for the six months ended 30 September 2014

	Notes	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Rental income	4	21,533	23,626	45,065
Direct costs	5	(7,671)	(8,160)	(16,519)
Net rental income		13,862	15,466	28,546
Surplus on revaluation of investment properties	12	11,578	5,215	22,735
Gain/(loss) on disposal of properties		1,084	(336)	(1,687)
Administrative expenses	5	(1,660)	(2,222)	(4,043)
Other operating expenses	5	(1,251)	(1,058)	(2,298)
Operating profit		23,613	17,065	43,253
Finance income	8	10	41	64
Finance expense	8	(5,793)	(6,182)	(12,155)
Change in fair value of derivative financial instruments		(2,567)	81	(128)
Profit before tax		15,263	11,005	31,034
Taxation	9	(2,615)	(716)	(2,102)
Profit for the period		12,648	10,289	28,932
Profit attributable to:
Owners of the Company		12,637	10,283	28,927
Non-controlling interest		11	6	5
Profit for the period		12,648	10,289	28,932
Earnings per share
Basic comprehensive income for the period attributable to ordinary equity holders of the Parent Company	10	2.43c	3.13c	7.31c
Diluted comprehensive income for the period attributable to ordinary equity holders of the Parent Company	10	2.36c	2.98c	7.01c

Unaudited consolidated statement of financial position

as at 30 September 2014

	Notes	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Non-current assets
Investment properties	12	456,866	420,912	441,087
Plant and equipment		1,712	2,043	1,834
Goodwill	14	3,738	3,738	3,738
Total non-current assets		462,316	426,693	446,659
Current assets
Trade and other receivables	15	7,713	8,649	11,378
Prepayments		898	711	1,570
K-Bonds I Junior Debt taken by SRE		-	2,000	-
Derivative financial instruments	19	165	-	678
Cash and cash equivalents	16	18,006	16,251	13,747
Investment property held for sale	13	2,097	7,720	2,633
Total current assets		28,879	35,331	30,006
Total assets		491,195	462,024	476,665
Current liabilities
Trade and other payables	17	(22,550)	(18,568)	(20,980)
Interest-bearing loans and borrowings	18	(2,721)	(191,360)	(2,813)
Current tax liabilities		(113)	-	(125)
Derivative financial instruments	19	(449)	(3)	(4)
Total current liabilities		(25,833)	(209,931)	(23,922)
Non-current liabilities
Interest-bearing loans and borrowings	18	(218,861)	(80,849)	(222,071)
Derivative financial instruments	19	(1,779)	(113)	(170)
Deferred tax liabilities	9	(6,566)	(3,172)	(4,200)
Total non-current liabilities		(227,206)	(84,134)	(226,441)
Total liabilities		(253,039)	(294,065)	(250,363)
Net assets		238,156	167,959	226,302
Equity
Issued share capital	20	-	-	-
Other distributable reserve		349,184	310,278	349,978
Retained earnings		(111,061)	(142,342)	(123,698)
Total equity attributable to the equity holders of the Parent Company		238,123	167,936	226,280
Non-controlling interests		33	23	22
Total equity		238,156	167,959	226,302

The interim condensed set of financial statements was approved by the Board of Directors on 13 November 2014 and was signed on its behalf by:

Robert Sinclair

Director

Unaudited consolidated statement of changes in equity

for the six months ended 30 September 2014

	Issued share capital €000	Other distributable reserve €000	Retained earnings €000	Total equity attributable to the equity holders of the Parent Company €000	Non-controlling interests €000	Total equity €000
As at 31 March 2013	-	303,637	(152,625)	151,012	17	151,029
Shares issued, net of costs	-	6,397	-	6,397	-	6,397
Share-based payment transactions	-	244	-	244	-	244
Profit for the period	-	-	10,283	10,283	6	10,289
As at 30 September 2013	-	310,278	(142,342)	167,936	23	167,959
Shares issued, net of costs	-	39,041	-	39,041	-	39,041
Share-based payment transactions	-	659	-	659	-	659
Profit for the period	-	-	18,644	18,644	(1)	18,643
As at 31 March 2014	-	349,978	(123,698)	226,280	22	226,302
Shares issued, net of costs	-	(133)	-	(133)	-	(133)
Share-based payment transactions	-	357	-	357	-	357
Dividends paid	-	(1,018)	-	(1,018)	-	(1,018)
Profit for the period	-	-	12,637	12,637	11	12,648
As at 30 September 2014	-	349,184	(111,061)	238,123	33	238,156

Unaudited consolidated statement of cash flows

for the six months ended 30 September 2014

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Operating activities
Profit before tax	15,263	11,005	31,034
(Gain)/loss on sale of properties	(1,084)	336	1,687
Adjustments for:
Share-based payments	357	244	904
Surplus on revaluation of investment properties	(11,578)	(5,215)	(22,735)
Change in fair value of derivative financial instruments	2,567	(81)	128
Depreciation	510	494	995
Finance income	(10)	(41)	(64)
Finance expense	5,793	6,182	12,155
Cash flows from operations before changes in working capital	11,818	12,924	24,104
Changes in working capital
Decrease/(increase) in trade and other receivables	4,054	568	(3,925)
Increase/(decrease) in trade and other payables	1,010	(5,071)	(1,464)
Taxation paid	(261)	(226)	(191)
Cash flows from operating activities	16,621	8,195	18,524
Investing activities
Development expenditure	(4,200)	(1,868)	(4,260)
Purchase of plant and equipment	(388)	(99)	(391)
Net Proceeds on disposal of properties	2,119	11,013	14,811
K-Bonds I Junior Debt taken by SRE	-	(2,000)	-
Interest received	10	41	64
Cash flows used in investing activities	(2,459)	7,087	10,224
Financing activities
Issue of shares	(133)	6,397	45,438
Dividends paid	(1,018)	-	-
Proceeds from loans	-	52,000	193,560
Repayment of loans	(3,753)	(68,452)	(259,838)
Finance charges paid	(4,999)	(5,694)	(10,879)
Cash flows from financing activities	(9,903)	(15,749)	(31,719)
Increase/(decrease) in cash and cash equivalents	4,259	(467)	(2,971)
Cash and cash equivalents at the beginning of the period	13,747	16,718	16,718
Cash and cash equivalents at the end of the period	18,006	16,251	13,747

Notes forming part of the financial statements

for the six months ended 30 September 2014

1. General information

Sirius Real Estate Limited (the "Company") is a company incorporated and domiciled in Guernsey whose shares are publicly traded on AIM.

The unaudited interim condensed set of consolidated financial statements of Sirius Real Estate Limited comprises that of the Company and its subsidiaries (together referred to as the "Group").

The principal activity of the Group is investment in and development of commercial property to provide conventional and flexible workspace in Germany.

The interim condensed set of consolidated financial statements of the Group as at and for the year ended 31 March 2014 are available upon request from the Company's registered office at PO Box 119, Martello Court, Admiral Park, St. Peter Port, Guernsey GY1 3HB, Channel Islands or at www.sirius-real-estate.com.

2. Significant accounting policies

(a) Basis of preparation

The unaudited interim condensed set of consolidated financial statements were prepared on a historical cost basis, except for investment properties and derivative financial instruments which have been measured at fair value. The unaudited interim condensed set of consolidated financial statements are presented in euros and all values are rounded to the nearest thousand (€000) except where otherwise indicated.

The audited consolidated financial statements of the Group for the year ended 31 March 2014 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU ("Adopted IFRSs") and The Companies (Guernsey) Law, 2008. The unaudited interim set of consolidated financial statements included in this Interim Report has been prepared in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU. The interim set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's audited consolidated financial statements for the year ended 31 March 2014. They do not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Group as at and for the year ended 31 March 2014. Having reviewed the Group's current trading and forecasts, together with sensitivities and mitigating factors and the available facilities, the Board has reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Board continues to adopt the going concern basis in preparing these financial statements.

(b) Basis of consolidation

The unaudited interim condensed set of consolidated financial statements comprises the financial statements of the Group as at 30 September 2014. The financial statements of the Company's subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies.

All intra-group balances and transactions and any unrealised income and expenses and profits and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from the Parent Company shareholders' equity.

(c) Significant accounting policies

The accounting policies applied by the Group in this unaudited interim condensed set of consolidated financial statements are the same as those applied by the Group in its audited consolidated financial statements as at and for the year ended 31 March 2014.

3. Operating segments

Segment information is presented in respect of the Group's operating segments. The operating segments are based on the Group's management and internal reporting structure. Segment results and assets include items directly attributable to a segment as well as those that can be allocated to a segment on a reasonable basis.

Management considers that there is only one geographical segment, which is Germany, and one business segment, which is investment in commercial property.

4. Revenue

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Rental income from investment properties	21,533	23,626	45,065

5. Operating profit

The following items have been charged/(credited) in arriving at operating profit:

Direct costs

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Service charge income	(16,344)	(15,589)	(33,965)
Property and management costs	24,015	23,689	50,391
Irrecoverable property costs	7,671	8,100	16,426
Property management fee	-	60	93
Direct costs	7,671	8,160	16,519

Administrative expenses

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Audit fees	170	159	352
Legal and professional fees	706	587	1,270
Other administration costs	558	624	1,186
Non-recurring costs	226	852	1,235
Administrative expenses	1,660	2,222	4,043

Other operating expenses

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Directors' fees	86	71	142
Bank fees	49	40	84
Depreciation	510	494	995
Marketing and other expenses	606	453	1,077
Other operating expenses	1,251	1,058	2,298

6. Employee costs and numbers

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Wages and salaries	4,347	3,219	8,080
Social security costs	816	654	1,752
Other employment costs	18	8	25
	5,181	3,881	9,857

All employees are employed directly by Sirius Facilities GmbH and Sirius Facilities (UK) Limited, both Group subsidiary companies. The average number of persons employed by the Group in the reporting period was 165 (31 March 2014: 151; 30 September 2013: 154), expressed in full-time equivalents.

The Board of Directors consisted of five Non‑executive Directors until 1 May 2014.  On that date, two Executive Directors were appointed with one Non-executive Director stepping down.

7. Equity-settled share-based payments

The Group has a long‑term incentive scheme for the benefit of certain key management personnel. As a result, 666,668 shares were granted in the scheme during the reporting period (year ended 31 March 2014: 1,000,000). An expense of €226,727 was recognised in the consolidated statement of comprehensive income to 30 September 2014 (year ended 31 March 2014: €240,000).

During the period, a further 932,779 shares were issued to the Company's management through its share matching scheme and shares taken in lieu of bonus (year ended 31 March 2014: 2,703,093). For the shares issued that were not expensed in prior years, an expense of €129,890 was recognised in the consolidated statement of comprehensive income to 30 September 2014 (year ended 31 March 2014: €663,000).

8. Finance income and expense

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Bank interest income	10	41	64
Finance income	10	41	64
Bank interest expense	(4,999)	(5,694)	(10,879)
Amortisation of capitalised finance costs	(794)	(488)	(1,276)
Finance expense	(5,793)	(6,182)	(12,155)
Net finance expense	(5,783)	(6,141)	(12,091)

9. Taxation

Consolidated statement of comprehensive income

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Current income tax
Current income tax charge	(249)	(498)	(538)
Adjustments in respect of prior period	-	318	-
	(249)	(180)	(538)
Deferred tax
Relating to origination and reversal of temporary differences	(2,366)	(536)	(1,564)
Income tax charge reported in the statement of comprehensive income	(2,615)	(716)	(2,102)

Deferred income tax liability

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Opening balance	4,200	2,636	2,636
Revaluation of investment properties and derivative financial instruments*	2,366	536	1,564
Balance as at period end	6,566	3,172	4,200

*     Movement refers to the revaluation of investment properties to fair value, the recognition of derivatives and adjustments for lease incentives (e.g. rent free periods).

Management does not recognise deferred tax assets in respect of revaluation losses as they may not be used to offset taxable profits elsewhere in the Group.

10. Earnings per share

The calculations of the basic, diluted and adjusted earnings per share are based on the following data:

	(Unaudited) six months ended 30 September 2014 €000	(Unaudited) six months ended 30 September 2013 €000	(Audited) twelve months ended 31 March 2014 €000
Earnings
Basic earnings	12,637	10,283	28,927
Diluted earnings	12,762	10,283	29,184
Adjusted
Basic earnings	12,637	10,283	28,927
Add back revaluation surplus, net of related tax	(9,212)	(4,679)	(21,171)
Add back change in fair value of derivative financial instruments	2,567	(81)	128
Add back non-recurring items	(49)	852	1,235
Add back (gain)/loss on sale of properties	(1,084)	336	1,687
Adjusted earnings	4,859	6,711	10,806
Number of shares
Weighted average number of ordinary shares for the purpose of basic earnings per share	520,244,292	328,708,966	395,758,526
Weighted average number of ordinary shares for the purpose of diluted earnings per share	541,077,625	349,542,300	416,591,859
Weighted average number of ordinary shares for the purpose of adjusted earnings per share	520,244,292	328,708,966	395,758,526
Basic earnings per share	2.43c	3.13c	7.31c
Diluted earnings per share	2.36c	2.98c	7.01c
Adjusted earnings per share	0.93c	2.04c	2.73c

The number of shares has been adjusted for the 4,919,284 shares held by the Company as Treasury Shares.

In addition to costs for the migration of the Company's tax domicile from Guernsey to the UK (€124k), land tax charges for prior years (€88k) and fees associated with refinancing (€14k), the non-recurring items include costs for shares issued under the long-term incentive scheme (€227k) and interest income received from prior years (€502k).

The Directors have chosen to disclose adjusted earnings per share in order to provide a better indication of the Group's underlying business performance; accordingly, it excludes the effect of non-recurring costs, deferred tax and revaluation surpluses and deficits on investment properties and derivative instruments.

11. Net assets per share

	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Net assets
Net assets for the purpose of assets per share (assets attributable to the equity holders of the Parent)	238,123	167,936	226,280
Deferred tax arising on revaluation of properties	6,566	3,172	4,200
Derivative financial instruments	2,228	116	(504)
Adjusted net assets attributable to equity holders of the Parent	246,917	171,224	229,976
Number of shares
Number of ordinary shares for the purpose of net assets per share	522,075,395	349,750,547	518,900,307
Net assets per share	45.61c	48.02c	43.61c
Adjusted net assets per share	47.30c	48.96c	44.32c

The number of shares has been adjusted for the 4,919,284 shares held by the Company as Treasury Shares.

12. Investment properties

A reconciliation of the valuation carried out by the external valuer to the carrying values shown in the statement of financial position is as follows:

	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Investment properties at market value	463,576	434,260	448,653
Adjustment in respect of lease incentives	(1,959)	(2,122)	(1,902)
Additional write-downs	(2,654)	(3,506)	(3,031)
Reclassified as investment properties held for sale	(2,097)	(7,720)	(2,633)
Balance as at period end	456,866	420,912	441,087

The fair value (market value) of the Group's investment properties at 30 September 2014 has been arrived at on the basis of a valuation carried out at that date by Cushman & Wakefield LLP (prior year: DTZ Zadelhoff Tie Leung GmbH), an independent valuer.

The value of each of the properties has been assessed in accordance with RICS Valuation Standards on the basis of market value. Market value was primarily derived using a ten year discounted cash flow model supported by comparable evidence. The discounted cash flow calculation is a valuation of rental income considering non‑recoverable costs and applying a discount rate for the current income risk over a ten year period. After ten years a determining residual value (exit scenario) is calculated. A cap rate is applied to the more uncertain future income, discounted to a present value. The weighted average lease duration was 2.4 years.

As a result of the level of judgement used in arriving at the market valuations, the amounts that may ultimately be realised in respect of any given property may differ from the valuations shown in the statement of financial position.

The movement on the valuation of the investment properties of market value as set out in the valuer's report is as follows:

	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Total investment properties at market value as per valuer's report as at 1 April	448,653	440,020	440,020
Additions and subsequent expenditure	4,699	1,752	4,325
Adjustment in respect of lease incentives	(57)	(9)	(230)
Disposals	(1,035)	(12,760)	(18,197)
Surplus on revaluation	11,578	5,215	22,735
Reclassified as other fixed assets	(33)	-	-
Excess Capex not included in revaluation	(229)	42	-
Total investment properties at market value as per valuer's report as at end of period	463,576	434,260	448,653

13. Investment properties held for sale

	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Berlin Gartenfeldstr. land	1,800	-	-
Cottbus site	297	297	297
Bremen-Brinkmann land	-	187	-
Bremen Doetlingerstr. site	-	-	2,150
Bonn-Siemensstr. land	-	186	186
Düsseldorf Wiesenstraße land	-	4,050	-
Bremen-Fabrikenufer site	-	3,000	-
Balance as at period end	2,097	7,720	2,633

In June 2014, the Company notarised the sale of one building and 27,321 sqm of land at the Berlin Gartenfeldstr. site for €2,205,000 and this deal was completed in November 2014.

On 22 March 2013, the Company reached an agreement to sell the property at the Cottbus site for €300,000. The site, which is a mixed-use site with office and storage space, is 63% occupied with current annual rent of €38,150 and net lettable area of 1,057 sqm. The transaction has been notarised and is expected to be completed within the current financial year.

14. Goodwill

	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Opening balance	3,738	3,738	3,738
Additions	-	-	-
Impairment	-	-	-
Closing balance	3,738	3,738	3,738

On 30 January 2012 a transaction was completed to internalise the Asset Management function and, as a result of the consideration given exceeding the net assets acquired, goodwill of €3,738,000 was recognised. Current business plans indicate that the balance is unimpaired.

15. Trade and other receivables

	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Trade receivables	1,240	1,609	4,545
Other receivables	6,473	7,030	6,833
Related party receivable	-	10	-
Balance as at period end	7,713	8,649	11,378

16. Cash and cash equivalents

	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Cash at banks and in hand	18,006	16,251	13,747
Balance as at period end	18,006	16,251	13,747

The fair value of cash is €18,005,609 (31 March 2014: €13,747,138).

As at 30 September 2014 €9,285,989 (31 March 2014: €6,734,622) of cash is held in blocked accounts. Of this €3,292,460 (31 March 2014: €3,032,188) relates to deposits received from tenants. An amount of €15,546 (31 March 2014: €15,546) is cash held in escrow as requested by a supplier and €116,278 (31 March 2014: €116,144) is held in a restricted account for office rent deposits. An amount of €5,837,877 (31 March 2014: €2,070,044) relates to amounts reserved for future bank loan interest and amortisation payments, pursuant to certain of the Group's banking facilities.

17. Trade and other payables

	(Unaudited) 30 September 2014 €000	(Unaudited) 30 September 2013 €000	(Audited) 31 March 2014 €000
Trade payables	7,071	3,850	5,318
Accrued expenses	6,314	7,923	6,983
Accrued interest	1,811	738	707
Other payables	7,354	6,057	7,972
Balance as at period end	22,550	18,568	20,980

18. Interest-bearing loans and borrowings

	Effective interest rate per cent	Maturity	(Unaudited) 30 September  2014 €000	(Unaudited) 30 September  2013 €000	(Audited) 31 March 2014 €000
Current
ABN AMRO
- floating rate facility	Floating	17 December 2013	-	40,986	-
Berlin Hannoversche Hypothekenbank AG
- floating rate facility	Floating	31 March 2014	-	149,391	-
Berlin Hannoversche Hypothekenbank AG / Deutsche Pfandbriefbank AG
- capped floating rate facility	Capped floating *	31 March 2019	1,150	-	1,150
- hedged floating rate facility	Hedged *	31 March 2019	1,150	-	1,150
Macquarie Bank Limited
- hedged floating rate facility	Hedged **	17 January 2017	543	517	529
- floating rate facility	Floating **	17 January 2017	169	195	183
- floating rate facility	Floating ***	17 January 2017	325	-	325
K-Bonds I
- fixed rate facility	6.00	31 July 2020	1,000	1,000	1,000
Capitalised finance charges on all loans			(1,616)	(729)	(1,524)
			2,721	191,360	2,813
Non-current
Berlin Hannoversche Hypothekenbank AG / Deutsche Pfandbriefbank AG
- capped floating rate facility	Capped floating *	31 March 2019	55,775	-	56,350
- hedged floating rate facility	Hedged *	31 March 2019	55,775	-	56,350
Macquarie Bank Limited
- hedged floating rate facility	Hedged **	17 January 2017	19,457	19,483	19,471
- floating rate facility	Floating **	17 January 2017	6,075	7,365	6,728
- floating rate facility	Floating ***	17 January 2017	30,880	-	31,815
K-Bonds I
- fixed rate facility	4.00	31 July 2023	45,000	45,000	45,000
- fixed rate facility	6.00	31 July 2020	5,000	6,000	6,000
Convertible fixed rate facility	5.00	21 March 2018	5,000	5,000	5,000
Capitalised finance charges on all loans			(4,101)	(1,999)	(4,643)
			218,861	80,849	222,071
Total			221,582	272,209	224,884

*    This facility is half floating and charged interest at 300 bps plus EURIBOR with a cap at 4.50%, and half hedged at a rate of 4.065%.

**  €20.0 million of this facility is charged interest at 600 bps plus 0.629% until 23 July 2016 by means of an interest rate swap. The remainder of the facility is charged interest at 6.0% plus EURIBOR.

***This facility is charged interest at 6.0% plus EURIBOR.

The Group has pledged 26 (31 March 2014: 26) investment properties to secure related interest-bearing debt facilities granted to the Group. The 26 (31 March 2014: 26) properties had a combined valuation of €444,939,121 as at 30 September 2014 (31 March 2014: €430,267,458).

18. Interest-bearing loans and borrowings (continued)

Berlin-Hannoversche Hypothekenbank AG

This facility had €226,500,000 drawn down, and was paid back in full on 31 March 2014.

Berlin Hannoversche Hypothekenbank AG / Deutsche Pfandbriefbank AG

On 31 March 2014, the Company entered into a facility agreement with Berlin‑Hannoversche Hypothekenbank AG and Deutsche  Pfandbriefbank AG for €115,000,000. The loan terminates on 31 March 2019. Amortisation was set at 2% p.a. for the first two years, 2.5% for the third year, and 3% thereafter, with the remainder due at the end of the fifth year. Half of the facility is charged interest at 3% plus three months' EURIBOR, and is capped at 4.5%; the other half has been hedged at a rate of 4.065% until 31 March 2019. This facility is secured over nine property assets and is subject to various covenants with which the Group has complied.

Macquarie Bank Limited

On 17 January 2013, the Company entered into a facility agreement with Macquarie Bank Limited for €28,500,000. The loan terminates on 17 January 2017. Amortisation was set at 2.5% p.a. for the first three years, with the remainder due at the end of the fourth year. The facility is subject to a cash sweep each quarter whereby Macquarie sweeps the rent collection accounts of the facilities' borrowers applying any excess towards the loan balance with immediate effect and without penalty.  €20.0m of the facility has been hedged at a rate of 6.629% until 23 July 2016 by way of an interest rate swap. The remainder of the facility is charged interest at 6% plus three months' EURIBOR. This facility is secured over five property assets and is subject to various covenants with which the Group has complied.

On 13 December 2013, the Company entered into a second facility agreement with Macquarie Bank Limited for €32,500,000. The loan terminates on 17 January 2017. Amortisation was set at 1% p.a. for the first three years, subject to meeting an agreed business plan, with the remainder due at the end of the fourth year. The business plan is tested quarterly in arrears and if the projected plan numbers are not achieved, Macquarie has the option to sweep the facilities' borrowers' rent collection accounts applying any excess towards the loan balance with immediate effect and without penalty. The facility is charged interest at 6% plus three months' EURIBOR. This facility is secured over nine property assets and is subject to various covenants with which the Group has complied.

K-Bonds

On 1 August 2013, the Company entered into a facility agreement with K-Bonds for €52,000,000. The loan consists of a senior tranche of €45,000,000 and a junior tranche of €7,000,000. The senior tranche has a fixed interest rate of 4% p.a. and is due in one sum on 31 July 2023. The junior tranche has a fixed interest rate of 6% and terminates on 31 July 2020. The junior tranche is amortised at €1,000,000 p.a. over a seven year period. This facility is secured over three properties and is subject to various covenants with which the Group has complied.

Convertible shareholder loan

On 22 March 2013, the Company issued €5 million convertible Loan Notes due in 2018 (the "Loan Notes"). The entire issue of €5 million was taken up by the Karoo Investment Fund S.C.A. SICAV-SIF and Karoo Investment Fund II S.C.A. SICAV-SIF, significant shareholders in Sirius. The Loan Notes were issued at par and carry a coupon rate of 5% p.a. The Loan Notes are convertible into ordinary shares of Sirius at the conversion price of €0.24 and can now be converted at any time. The majority of the proceeds from the issue of the Loan Notes were used to reduce debt levels, thereby facilitating the Group's refinancing completed earlier in 2014.

19. Financial instruments

Fair values

Set out below is a comparison by category of carrying amounts and fair values of all the Group's financial instruments that are carried in the financial statements:

	(Unaudited) 30 September 2014			(Unaudited) 30 September 2013			(Audited) 31 March 2014
	Carrying amount €000	Fair value €000		Carrying amount €000	Fair value €000		Carrying amount €000	Fair value €000
Financial assets
Cash	18,006	18,006		16,251	16,251		13,747	13,747
K-Bonds I Junior Debt	-	-		2,000	2,000		-	-
Trade receivables	1,240	1,240		1,609	1,609		4,545	4,545
Derivative financial instruments	165	165		-	-		678	678
Financial liabilities
Trade payables	7,071	7,071		3,850	3,850		5,318	5,318
Derivative financial instruments	2,228	2,228		116	116		174	174
Interest-bearing loans and borrowings:
Floating rate borrowings	37,449	37,449		197,937	197,937		39,051	39,051
Floating rate borrowings - hedged*	76,925	76,925		20,000	20,000		77,500	77,500
Floating rate borrowings - capped	56,925	56,925		-	-		57,500	57,500
Fixed rate borrowings	56,000	56,116		57,000	56,753		57,000	56,312

*     The Group holds interest rate swap contracts designed to manage the interest rate and liquidity risk of expected cash flows of borrowing for the Group's variable rate facilities with Macquarie Bank Limited and with  Berlin Hannoversche Hypothekenbank AG / Deutsche Pfandbriefbank AG. The swap contracts hedging the facilities with Macquarie Bank Limited mature on 23 July 2016.  The swap contracts as well as the cap contracts hedging the facility with Berlin Hannoversche Hypothekenbank AG / Deutsche Pfandbriefbank AG mature on 31 March 2019.

20. Issued share capital

	Number of shares	Share capital €
Authorised
Ordinary shares of no par value	Unlimited	-
As at 30 September 2014	Unlimited	-

	Number of shares	Share capital €
Issued and fully paid
Ordinary shares of no par value
Issued ordinary shares	327,800,000	-
Shares brought back and held in treasury	(25,576,824)	-
Issued Treasury Shares during the period	15,355,000	-
As at 31 March 2013	317,578,176	-
Issued ordinary shares	197,619,038	-
Issued Treasury Shares during the period	3,703,093	-
As at 31 March 2014	518,900,307	-
New shares issued	1,575,641	-
Issued Treasury Shares during the period	1,599,447	-
As at 30 September 2014	522,075,395	-

In June 2014, the Company announced a dividend of 0.30c per share with a record date of 25 July 2014 and payable on 29 August 2014.  The dividend was offered to shareholders in cash or scrip form. Accordingly, on 29 August 2014, the Company allotted and issued 1,575,641 ordinary shares at a reference price of €0.3445 to shareholders who elected to receive ordinary shares under the Scrip Dividend Programme as an alternative to the dividend. The new shares rank pari passu in all respects with previously existing issued shares of the Company including the right to receive all dividends and other distributions declared after admission and the right to vote at any general meeting.

The Company holds 4,919,284 of its own shares, which continue to be held as Treasury. No share buybacks were made in the period.

21. Dividends

In June 2014, the Company announced a dividend of 0.30c per share with a record date of 25 July 2014 and payable on 29 August 2014.  On the record date, 525,419,038 shares were in issue, of which 4,981,784 were held in treasury and 520,437,254 were entitled to participate in the dividend.  Holders of 180,938,053 shares elected to receive the dividend in ordinary shares under the Scrip Dividend Programme representing a dividend of €542,808, while holders of 339,499,201 shares opted for a cash dividend with a value of €1,018,501.  The total dividend was €1,561,309. 

In light of the incremental income, mainly arising as a result of the capital investment programme, as well as the ability to fund this programme from cash reserves and the cash generated from the disposal of non-income and low-income producing assets, the Board has decided it has the ability to increase the dividend to shareholders and has amended the dividend policy to pay out 65% of FFO (funds from operations, comprising recurring earnings after tax, adjusted for depreciation, amortisation of debt arrangement fees and other non-cash items) rather than the previously announced policy that referred to recurring earnings after tax.

In line with this policy, the Board has proposed to pay a dividend for the period ended 30 September 2014 of 0.77c per share, again providing the option of receiving scrip in lieu of the dividend.  The dividend per share was calculated as follows:

	30 September 2014	30 September 2013
	€million	€million
Reported PBT	15.3	11.0
Adjustments for:
Gain on Revaluation	(11.6)	(5.2)
(Profit)/Loss of Disposals	(1.1)	0.3
Non-Recurring (Revenue)/Costs*	(0.1)	0.9
Change in FV of Derivatives	2.6	(0.1)
Recurring PBT	5.1	6.9**
Adjustments for:
Depreciation	0.5	0.5
Amortisation of Financing Fees	0.8	0.5
Impact of Disposed Assets	-	(0.2)
Surrender premium	-	(1.7)
Current Taxes Incurred	(0.2)	(0.2)
Funds From Operations	6.2	5.9
Dividend Pool	4.0***
DPS	0.77 c

* Include the net effect of management LTIP rewards, costs for UK migration and gain resulting from ABN loan settlement.

** Recurring PBT €5.0m when adjusted for the surrender premium of €1.7m received last year and for disposals

*** Calculated as 65% of Funds From Operations

22. Capital commitments

As at 30 September 2014 the Group had contracted capital expenditure on existing properties of €2,150,502 (31 March 2014: €4,066,797) and commitments of €549,836 (31 March 2014: €355,776) derived from office rental contracts. These commitments have not yet been provided for in the balance sheet.

Corporate directory

Registered office

PO Box 119
Martello Court
Admiral Park
St. Peter Port
Guernsey GY1 3HB
Channel Islands

Registered number

Incorporated in Guernsey under The Companies (Guernsey) Laws, 2008, as amended, under number 46442

Company secretary and administrator

Intertrust Fund Services (Guernsey) Limited

PO Box 119
Martello Court
Admiral Park
St. Peter Port
Guernsey GY1 3HB
Channel Islands

UK solicitors

Norton Rose LLP

3 More London Riverside
London SE1 2AQ

Financial PR

Novella Communications

19 Buckingham Gate
London SW1E 6LB

Nominated adviser and joint broker

Peel Hunt LLP

120 London Wall
London EC2Y 5ET

Joint broker

finnCap

60 New Broad Street
London EC2M 1JJ

Property valuers

Cushman & Wakefield LLP

Rathenauplatz 1
60313 Frankfurt am Main
Germany

Independent Auditors

KPMG Channel Islands Limited

Glategny Court

Glategny Esplanade

St Peter Port

Guernsey, GY1 4AN
Channel Islands

Guernsey Legal Advisors

Carey Olsen

PO Box 98
7 New Street
St. Peter Port
Guernsey GY1 4BZ
Channel Islands

 

END

 

 

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