Sirius Real Estate Limited

Good morning, everybody, and welcome to today's presentation of Sirius Real Estate's interim results for the period ending September 2025. My name is Andrew Coombs. I'm the Chief Executive Officer of the Sirius Group, and I'm joined this morning by Chris Bowman, who is the Group Chief Financial Officer of Sirius Real Estate. Together, we will take you through this morning's presentation. As you all know, we are an on-balance sheet, best-in-class owner and operator of mixed-use light industrial business parks on the edge of key towns in Germany and the United Kingdom. Please remember that Sirius operates in both the German and the UK markets. under the brand of Cirrus in Germany and BizSpace in the UK. The group currently operates over 3 billion euros of property, 90% of which is wholly owned by the group. This consists of 160 sites in total, 77 in the UK, 76 in Germany and 7 sites within the Titanium joint venture in Germany. Let's now turn to page four and look at the highlights for the period. The Sirius Group is a rigorous, well-run and very importantly growing organisation. We have proved the resilience and the reliability of the business model during COVID, during the gas crisis in Germany, and most recently through a period of rising interest rates in Europe and the UK, during which we have successfully protected valuations in spite of yield expansion. In that time, we have continuously, without exception, grown our revenues. We have continually, without exception, increased our dividend payments And as I said, we have made sure that the value of our properties goes up, not down. In the period to September 25, we successfully grew like-for-like rent roll by more than 5%. And as a result of the acquisitions in the period, we have grown the total rent roll by more than 15%. We have done this by maintaining occupancy in Germany and increasing it by just over 1% in the UK. And we've increased like-for-like pricing in both markets by more than 4%. As a result of this, we are announcing a dividend of 3.18 cents, which at per share level is a year-on-year increase of 4%. So let me now ask you to turn to page 5, and Chris will take us through the income statement.

Thank you, Andrew. Good morning, everybody. As Andrew said, over the next four pages, I will run through some of the highlights of the P&L and also the balance sheet, just picking out some of the key items. So on page five, just starting at the top, very pleased that that increase in like-for-like rent roll of 5.2% has underpinned growth in rental income of 7.7% for the first half last year. So you can see there we've achieved 112.6 million of rental income. That has translated to a 4.9% increase in net operating income. As I've mentioned in the past, as we have acquired assets, we're in acquisition mode, very active acquisition mode. As we've acquired assets, some of those assets tend to have higher service charge leakage than in our existing core portfolio. So there is a small drag which we turn around relatively quickly on service charge costs that you can see there. That is obviously upside for the future to come through. Looking down at EBITDA, you can see off that 7.7% top line, we've achieved 9.7% increase in EBITDA. So very pleased to achieve some operating leverage there. As we grow the asset base and we grow the income base, we are keeping very tight control of our costs and to then improve our margins, specifically within that corporate costs and overheads dropping from 24.8 to 22.7. We have been very careful from a headcount perspective and found efficiencies. We've also tightened up and had various initiatives internally to improve our cash collection. That has allowed us to be tighter on provisioning and again has provided upside there. Moving on. Unfortunately, I'm going to continue to talk about headwinds of finance cost, unfortunately, for the next two or three years. We do have the finance cost headwind that we continue to outrun. So you can see there our net finance expense goes from 6.3% to 9.4%. But still, we more than have outrun that with the growth at the EBITDA level to achieve an FFO up 6.6%, 64.7 million. As I think those of you know us already, FFO is our core target in the business. It's the cash flow, it's the profitability of the business that we really focus on. We are an operationally focused business. We are not... trying to guess the property markets or play valuation yields. We're focused on providing profits, growing profits to provide growing dividends. So very pleased to achieve that 6.6% increase in FFO. I've included the detail all the way down to profit after tax on this page because there are three items that I think need further explanation. One headwind and two tailwinds. So within the foreign exchange, you can see there 14.3. There is a £14.2 million of that is what is classed as a realised FX loss, which relates to sterling cash balances, which we held at the beginning of the period in anticipation of that cash being placed into UK assets, UK investments. It was a very busy first half for acquisitions. We acquired over €200 million worth of property in the UK. We held the appropriate level of cash in sterling to do that. When that cash converted from the cash line into the investment properties line, it was marked to market at the FX at that moment. It is, unfortunately, it does all flow all the way through EPRA earnings. So you'll see it, but it is a one-off. And I'll happily take questions further on that. On the upside, we have 14.4 million of valuation gain. So that is purely for the first half. I would expect to achieve better than that in the second half. But again, that's with virtually no yield contraction. We'll come on and talk about later. That's really valuing the increase in rent roll that we've achieved. And then further down the page, you can see the profit after tax is materially up 56.8% at 87 million. Part of the fiscal stimulus that Germany has enacted is, is the reduction in the corporation tax rate from 15% to 10%. That goes down by 1% a year from 2028. What that means is that our deferred tax liabilities on the gains in our property portfolio reduce. So you can see there is a 29.8 million reduction in deferred tax liabilities that flows through the P&L and hence drives that profit after tax number up. Going over the page to page six, just reflecting that on a per share basis, we have the 98 million euros of NOI converts to 6.52 cents per share. These numbers And all still have the impact of the additional shares that came into the share count from July 24 equity raise. So prior year, there was a weighted average number of shares. Now this is on the full number of shares that is outstanding. The interest and current tax equates together to 10.8 million, that's that 0.72 cost line, gets us to the 4.3 cents of FFO. Below the FFO line, really the thing I would flag is that 14.2 million foreign currency translation that then has an impact on the adjusted earnings and EPRA earnings But as I say, it's non-cash. If you look at our cash flow statement, our operating cash flow broadly correlates with the FFO. We have paid out in dividend 3.18 cents or proposing to pay out 3.18 cents, as Andrew said, up 4%. That equates to a 74% payout ratio for the first half. That will start to transition down going forwards and we will settle around 70% payout ratio in the next three to four years as we go through the financing windows. Onto page seven, just looking at the balance sheet. At the top line, you can see that our investment properties have increased by 300 million. So within that you have the 295 million of acquisitions that we actually completed on in the period. you've got 14.4 million of valuation gain across the group, and then a disposal of some smaller sites in the UK is the balance. The cash balance has come down to 424.9, of which 389 is ours, excluding the deposits of tenants. The 179.9 movement is net of the bond tax that we did in the period of 105 million. And then on the bottom half of the balance sheet, really the only thing to flag there is that the debt outstanding is at 1.416 billion. Bear in mind that we have the repayment of the June 26 bond coming up for 400 million, hence why the cash balances are relatively inflated and also the debt balance is relatively inflated as well. But those two net each other off. Just a reminder, we also put in place 150 million RCF during the period which provides that liquidity to repay that debt. Looking down at NAV, reported NAV is up 0.8%, benefiting from that valuation gain. Adjusted NAV is down 0.9%, roughly 1.1 cents. Again, there is a foreign exchange unrealised currency translation there. of 29 million, which in simple terms is just converting our UK assets into our reporting currency of Euros. Bear in mind that if you then convert the entire NAV back to sterling, our sterling is up, and our NAV is up. On to page eight, just quickly just running through the waterfall of NAV from EPRA at each end from March to September. I think EPRA NAV going from 117.6. We target ourselves on adjusted NAV, 118.89. As I say, the two cent headwind is the unrealized FX of 29 million. We achieved 27.5 million recurring profit out of tax in Germany. We had 17.7 million upside in valuation in the German portfolio, as well as then 19 million euros of profit out of tax in the UK, which is 1.27. A small valuation loss after CapEx of 2.2 million in the UK. Net off the dividend gets you back down to 117.84. So really the delta in there, the movement, is the FX, which without the FX we would have been up in NAV terms. I'll hand over to Andrew on page 9.

So page 9 deals with the organic growth in Germany. And just before I delve into the numbers, let me give you a little bit of the narrative. Because if I cast my mind back to the beginning of the period, the first quarter of this financial year, so April starting quarter, it's easy to forget. that the German government had only just taken power in April of this year. And I think it's probably fair to say that the new government was still establishing itself and certainly hadn't gained any momentum at that point. And we certainly felt that in the trading. The first quarter of this year in Germany was a tough quarter. We made our numbers, but the effort and the workload that we had to put in to achieve that was certainly much greater than it normally is. We saw the momentum start to establish itself in the second quarter. And I'm pleased to tell you the six weeks following the end of the period, we very much feel that that momentum is gathering pace. I would describe Germany at the moment is in a transitionary phase. And it's quite confusing because when you look at numbers like the numbers on German manufacturing, you don't see any substantial increase at this point in time. Lots of people therefore turn around and say, you know, what's happening in Germany and are things good in Germany? What we see on the ground is we see reorganisation. So we see factories stopping production. We see things being reorganised. And they're typically being reorganised towards defence. But the problem right now is that you have to stop producing what you produce in your factory in order to strip it out and prepare the production lines to produce defence-related items. And that's what I mean by a transitionary phase. And that's why the production numbers are going down. But what is happening is the preparation is being laid for in a couple of quarters' time those production lines to be up and running and operating not just one shift, as we often see here in the UK, but typically a continental shift pattern of three shifts every 24 hours, at least six days a week. So what we believe is that Germany is preparing to substantially increase its output. We've seen this before in previous years. We've seen it where they've used in the past furlough or Kutzarbeit, as they call it in Germany, where suddenly what happens is the economy appears to flip. Some have called it in the past the German economic miracle. It's no miracle at all. It's Germans preparing before they flick the switch. That is exactly what we see happening in Germany at the moment. And in that period, what we were able to do is we were able to grow the like-for-like rent roll by 7.2 million, so 5.3%. We were also able to increase the overall annualised rent roll by 12%. But the difference between that 5.3% and the 12% is, of course, acquisitions. We were able to increase pricing by 4.7%. Would you believe it? That's a little bit more than we wanted to do. We are in an occupancy-led strategy here. What that means is that we want to control our pricing to about 4% and get the rest of the effect out of increasing occupancy. When you've got a workforce who've been used to putting prices up, not only do you have to get your processes and your systems to do the right thing, you've got to get people to do what is the opposite of what we've been asking them to do for years, which is put prices up by less. And actually, in that regard, we slightly failed because our occupancy remained constant and price, we were aiming for 4%, price nearly hit 5%. You can see that in doing that, what we did is we had to lower our move-in rate, and what we achieved was a move-in rate that was just marginally higher than the move-out rate. So move-in at 7.66 versus move-out at 7.52. But all of that was successful in lifting the underlying like-for-like rate per square metre in the portfolio as a whole from €7.38 per square metre per month to €7.73 per square metre per month. So a delicate balance, largely due to the first quarter, but successful in as much as we continue to push rates up in the portfolio. And in doing so, we've been able to make sure that we at least maintain our occupancies. We go across the page and we look at that rent roll movement. you can see the 7.2 is reflected in the difference between 135.3 and 142.5. What we faced was 19.5 million of move-outs, and the way in which we compensated for that was really the 6.2 of CAPEX-assisted move-ins together with the 14.1 like-for-like move-ins. Those two gave us a total of 20.3, so 800k above the move-out effect. And then the uplifts, the pricing at 4.7%, gave us 6.4%, and that 6.4% together with the 0.8% gets you to the 7.2%. But really, the exciting thing is those acquisitions in the right-hand column. And bear in mind, the last 40 million of acquisitions in Germany that completed only last week, not included in these numbers. But what you've got is you've got over nine million euros of second half effect to come from those acquisitions. That nine will build closer to 10. So that's a 20 million annualized effect that's going to bake through into next year's numbers. Now, half of it. will get eradicated by increased interest rate, and Chris will talk about that. But we've got sufficient acquisitive growth here to be able to deal with the increased interest and still have 10 million euros of FFO growth. Put on top of that, the 5% organic growth, And I hope what you can see is, rather than using interest rate increases as an excuse to go backwards, what we've been able to do through careful planning and careful execution over the last 18 months is put ourselves in a position where we can outgrow next year's problem. If I go across to the following page, we can talk about valuations. So, The first thing that I would draw your attention to is on the right-hand side above the total assets black headline, net yield shift of one BIP. That shift is the yield coming in, not going out. Why the valuers would have bought us in by one BIP, I cannot imagine. But I would suggest it is a signal. and the signal is clearly that the direction of travel is that the yield is shifting in in Germany, not out. Clearly it's made very little, if any, difference, because we started in March 25 with a valuation of £1,890,000,000, and we get to September 25 on £1,921,000,000. clearly a 31 million shift there. That 31 million shift comes from 2.3 million of additional rent roll valued at a gross yield of 7.4%. And what you can see in the bottom right-hand corner of this page is you can see after the acquisitions that we're talking about have been made, The yield at a gross level goes up slightly and the capital value per square metre goes down. That is because we are buying vacancy. That is because we are buying lesser quality rent roll because that is exactly our runway to put our machine across the top of it and improve it. So the reason that you are seeing that gross yield go out is because of the opportunity that we're buying and the belief that we can do something with that opportunity by putting it over our platform. If I go across to the inquiry stats, what we can see here is the number of sales, the number of customers we have acquired is 3% down. The sales volume that we've acquired compared to same period last year is 2.5% down. However, what we are pleased about is sales conversion is at 14.6% up from 12.8% and close to our long-chased target of 15% sales conversion. We are at last beginning to hit those numbers on a regular basis. What this shows is it shows the pain in quarter one of the first half, and it shows our ability to work the platform harder in the form of sales conversion in order to make what we've got count and drop more frequently to the bottom line. So this reflects the first quarter, but it also reflects the strength of the platform to deal with issues as and when they arise. If we go across to some of the acquisitions, I'm not going to go through every single one because they've been covered previously in lots of different announcements. But I draw your attention to Dresden. Dresden is, we think, one of Germany's best kept secrets. Silicon Saxony where there is the most incredible amount of inward and foreign investment going in. Tim Leckie and I were in Dresden a few weeks ago. What did we count? Something like 17 cranes on the horizon and not 17 static cranes, 17 working cranes within the eye line in Silicon Saxony building things. Lubeck. Lubeck is in the area that benefits from the biggest infrastructure spend that is currently going on in Germany. And if we go across the page, we see Dresden again, no surprise. And we see Fielkirchen on the right, just outside Munich. This is an asset where one third of the rent role is a defence supplier, a defence supplier who specialises in the manufacture and development of optical devices, most notably night vision technologies for the military. If I go across to page 15, let me hand across or hand over to Chris.