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.

Thanks, Andrew. So just on page 15, I just thought it'd be good to update everyone on the current status of the portfolio and also on the next two pages on CapEx as well. really page 15 I think is the kind of secret sauce in Sirius for the growth of Sirius that is how do we take the Sirius platform put it to work on our property portfolio and take assets which have value creation opportunity and and capitalize on that value how do we how do we create that value for shareholders now We break down our portfolio into the two buckets of value add and mature. You can see there that the roughly speaking is one third mature, two thirds value add. And really the value add piece is the piece where we go to work on these assets to essentially try and mature them, to try and put them into the mature bucket. And why do we do that? We do that because of the opportunity to drive value. So you can see the average yield, our gross yield is 6.8% on our mature assets, 7.9% on our value add. Importantly, the gap between net and gross yield, the leakage on service charge is 90 bps on value-add versus 30 bps on mature and also how the valuers then value that greater income and better performance. On average, we are at 1,277 euros capital value per square meter in the mature versus 868 in the value-add. you can see what we have to achieve to get from one to the other in terms of occupancy on average 78.9 versus 94 and also the upside from rate. By improving our assets that have this opportunity in them, we get many benefits, not only additional rent roll, but also then better net operating income because better management in terms of property expenses. We get valued better by the valuers, and obviously we've achieved higher rate as we improve the quality of a site as well. It becomes a... an ever-improving cycle essentially on those assets as we improve them. Now, we have overall 336,000 square metres of vacancy to power the growth in the business. On average, we typically look to improve roughly 100,000 square metres a year. that links into our CapEx plans each year. And so you have at least a three year runway of growth in the business. And obviously as we're acquisitive at the moment, we are continually replenishing that opportunity. Over the page, just looking at where we are really putting capital to work to help on that journey from value add to mature. In the first half, we have invested 18.6 million in our CAPEX programmes, roughly split two-thirds Germany, one-third UK. The value-add CAPEX is that piece of the pie that really generates the high returns. We put a minimum 30% return on investment, so that's cash return on what we spend. So we're looking for a three-year payback. on incremental rental income from all of our value-add capex spend. You can see again it's split roughly two-thirds Germany, one-third UK. On the right-hand side, you can see some of the pictures of where we've actually put that capital to work. Bottom right, Vantage Point, when we moved the range out of Vantage Point, essentially there was three large halls left for us to tackle. We have already refurbished one of those halls. We've put one and a half million of capex into that hall and we have let it to Big Doug. which was an existing tenant on the site. I think for those of you who've been to Vantage Point, I remember we visited them before they were moving into the new space. Please say they have now moved in. And the effect of that one and a half million spend allowed us to achieve double the rate on that space that it previously was achieving. New builds. We are in a cycle here where we have just finished the new builds at Gartenfeld. So on the top right there, you can see one of the three halls we built at Gartenfeld. So just 800k went into just final completion of that hall. We've rented all three of those halls at Garton Felt at far better rates than we expected. And then from a works perspective, just under 10 million spent on works. So we keep a very, very tight lid on our, that's essentially the maintenance capex. That's often the likes of renewing lifts, for instance, that type of spend. But within there, there is 2 million spend on ESG, which is principally PV solar in Germany, as well as 2 million in the UK, which relates to EPCs and our continuing drive towards C and B. Over the page, page 17, I've rolled this forward essentially. So I'm looking back over the last three years. What is our spend and how are we performing? We have put 293,000 square metres of vacancy. We've put capex into value-add capex. That equates to 31 million of spend. On average, 106 euros per square metre. So this is not... what I'd describe as kind of high-risk capex. We're not, as a norm, we're not completely rebuilding or knocking down space. We are typically refurbishing space. The most complicated it tends to get is subdivision and the fire safety regulations that come with that. But it's very much low risk and low cost refurbishment. We've achieved 12.7 million of rent improvement off that. So and at the moment, the occupancy is 74 percent that continues to build as the capex we spent in the most recent period. Some of that space continues to be let up. And we're achieving rates of 491, which gives us a return on the investment of 41% cash return. Just conscious of time, move on to slide 18. As I say, new builds. We have just come to the end of the A, B, and C halls at Gartenfeld. I would highlight that we've achieved a yield on cost there of 9% on a site which is valued at 5.5%. So obviously as that income is valued at five and a half, we've achieved 21% IRR on those developments, which is on surplus land at Gartenveld. In the pipeline, there is an additional 25 million of projects that spread across. There's two sites in Dresden where we have opportunity for development. There is also another space at Gartenveld as well, where there is further development. I'll hand back to Andrew to talk about UK.

Okay, I've got to switch into UK mode now and think about the UK picture, which is a different picture from the picture I described in Germany. So let's start firstly with the annualized rent roll. The annualized rent roll, which obviously benefited from acquisitions, many of you have seen Hartlebury, was up 21%. 5.1% of that comes from the like-for-like rent roll. And as you can see, what happened here, was we were more successful in convincing our sales force to be able to lower price and in doing so raise occupancy by 1.2%. However, you've got a slightly different situation here with your move-ins and your move-outs. We actually dipped below the move-out rate on the move-ins. But we were still successful in that equation in terms of lifting the like for like underlying rate in the portfolio by 4.1%, namely from 14.38 pence per square foot to 14.97. How did we do that? Well, we did that with our expansion initiatives. As you can see, what happened is we had 344,000 square foot move out, 302 move in. But what we're also able to do is to work the existing base of customers to get some of them to take more space and some of them to take more products. So we've had to work very hard here in the UK. in order to be able to get that 1% of occupancy and also to be able to not just maintain but increase price by at least 4%. That 4% is important because we know inflation in the UK isn't as much as 4% at the moment, but it could be soon. And we don't want to be caught out by that. We don't want to be trying to catch the inflation. We want to make sure that we are in a process in the UK where we're always ahead of inflation in terms of the way in which we manage that rent roll of customers. So rate per square foot is up by 4.1%. Move outs are at 1844, which is 57p or 3% lower than the move outs. That's had about a 1% overall effect. because your new business affects about one third of your total. It's your renewals that affect typically the other two thirds. And what we're seeing in the UK in contrast to Germany is we're seeing the UK get harder. Germany's getting easier. UK's getting harder. We are not panicking about that. We believe that the platform in the UK is now well enough developed and strong enough to be able to overcome that market effect. And that's exactly what you're seeing in the figures on this page in front of you now. If we look at the way it's built, you can see 59.3 rent roll moves in September 25 to 60.4. You can see that the move outs and move ins, that the move outs are not quite covered by the move ins. But look, that pricing uplift to 3.8 million becomes so, so important because that's what gives you the final edge. And then if you look at acquisitions, 14.4 million coming from acquisitions. As you know, in the last six months, the acquisitions have been slightly more weighted to the UK than Germany. That will change now going forward. We are going to be looking at a predominantly German-only effort at least until May, June of next year. If we have a look at what that looks like in a valuation perspective, net yield shift of 4 bps. Well, that's going out, not coming in. So again, the 4 bps don't really make much difference, but the signal from the valuers is that in the UK, yields continue to widen. If we look at the bottom right-hand corner and you see the assets being included, not just on a like-for-like basis, but the acquisitions that have been made in the period, you see the opposite to what I described in Germany. You see a gross yield coming in to 12.3%. At March 25, it was 14.1%. And you see the net yield coming in from 9.5% to 8.8%. That is reflective of the quality of assets we've been buying in the UK. When you think about Hartlebury, when you think about Vantage, when you think about Chalcroft, I could go on. We have consistently been buying higher quality assets than the assets we inherited when we bought the business. They typically have longer lease lengths. That's not long lease lengths, that's longer lease lengths. So what we're doing in the acquisition program that we've conducted thus far in the UK, that we are going to be pausing on until at least June of next year, what we've done is actively gone out to increase the overall quality of the portfolio, and that's reflected by what you see in the bottom right-hand corner. If we go across the page... What we can see in the UK is we've been able to attract more inquiries. A little bit deceiving there because we're not passive. It's not like we just sit there and say, what does the market give us in inquiries? We have worked much, much harder to acquire more inquiries that we've then been able to convert into sales. Please don't look at these numbers and think UK market's going up because... This lead flow reflects what is happening when you just passively sit there and try and collect whatever the market gives you. These numbers are misleading if you read them like this. We have had to work a lot harder to increase that inquiry flow in the UK. If we go across to the acquisitions, I've talked about Hartlebury in the middle here, Bedford on the left-hand side. Interesting enough, one-third of the rent roll in Bedford is underpinned by a company that manufactures... parts for ejector seats for the defence industry. In fact, they make parts for the ejector seats in the F-35 Typhoon Eurofighter. So when you see these orders being announced by UK defence industry, that factory is one of the beneficiary of those orders. Chalcroft, I'm delighted to tell you that we've had very strong interest from a major supermarket so Chalcroft next door to it has got hundreds of new houses currently being built and we're in advanced discussions with a major supermarket to develop on the front land of that site one of the big four supermarkets to serve that residential area. So call that a stroke of luck, call it whatever you like but that's going to be quite good for us. Let me hand over to Chris.

So I don't intend to. Just on page 24, I won't go through these line by line, but I think the highlights, obviously, in aggregate, we have acquired an 8.1% gross yield. You've seen earlier that our existing portfolio is valued around 7.4%, 7.5%. And in aggregate, we have acquired €338 million, of which €295 completed in the period. Feldkirchen, just at the bottom there in November, completed last week. So that is also now on the balance sheet. I think if you look at timing, then just to reiterate Andrew's point earlier, the majority of these acquisitions actually completed towards the end of the first half. So really that annualised rental income of 25.8 million has yet to actually flow through into the P&L, but there is significant growth to come through, which is in the tank for future periods. On the disposals, Fungstadt, we have notarised the recycling of that asset, 30 million in Germany. That completes at the end of this financial year, so at the end of March for 30 million. Just to head off, I'm sure I'll get a question on Tisely. Why have we sold an asset in Tisely at 16.6% gross yield? There was also significant maintenance costs there. And getting straight to the point, it needed a new roof, which would have been an additional 3 million spend. So from a business planning perspective, it made sense to realise that asset at this time. And it's also linked to the continued consolidation of the UK portfolio. We're just looking to exit some of the non-core smaller assets and you'll continue to see us do that.

Page 25. Okay folks, so just before I introduce page 5, you know, let me remind you that we are currently within our stated mission to get to 150 million and according to consensus we should get there at the end of the 28th year. We obviously want to do it earlier but we should get there at the end of the 28th year. Now, if you look at this page on the left-hand side, it picks stuff up at the end of the financial year last year, so March 25, when we did 123 million of FFO. As you know, consensus is that we'll do north of $133 million this year, and we are trading in line with those expectations. So when you come out of this year at $133, looking at doing something beginning with $140 next year, you then need to start thinking beyond your $150 million goal. There is no point... in a long-term business like property waiting till you get there and then go let's pause congratulate ourselves start again after we've had a holiday and a bit of a break because you lose the momentum you've got to start thinking far enough ahead about what you do now that determines your result in three years' time. Think about it. We buy a property now, and in some cases, you know, it becomes, you really get into the value add next year. But in a lot of cases, it takes two or three years to get into that sweet spot of value creation. And therefore, unless you're thinking about it now, you're not going to be there in three years' time. So it should be no surprise that now that we are in the 133 year, moving into the 140-something year, that what we do is we start to plan beyond the 150. And this is not just for shareholders. This is internally in the company. We are having meetings with people and we're saying, what's next? Are we properly resourced? Do we have the right sites? So what you're seeing for the first time on this page is you're seeing us publicly talk about the next leg of the journey. Now, beyond 150, the ambition will be 200. But the first leg of the journey from 150 to 200 will be the leg to 175. And that's what you see laid out here. And one of the things that you should take great comfort from is if you look at that pillar that says 40 million, Well, half of that is already done. Half of that has been executed, closed off, in the bag, in our control. What we need to focus on is the other half of it. And this 175, when we get to this 175, this should be driving a dividend at roughly a 70% payout ratio, a dividend that's somewhere in the region of about 7.5 cents. So at the moment, you know, we're heading towards 6.4. This 175 takes you to 7.5. Now, it does matter the detail of how you get there. But at the moment, it kind of doesn't. Because at the moment, it's about the aspiration. It's about the mindset. It's about the shape of your thinking to be pushing towards that 175. to be able to realize the value creation and the value benefits that come from that. And that's why we're laying it out in public, because we've already started to talk about it internally and plan for it. But what you should take some comfort from is the mindset of this company is to grow. And in spite of the headwinds that Chris has spoken about, those headwinds are not a reason for us to stop. They are a reason for us to accelerate. They are a reason for us to expand our thinking. Because if we're going to achieve the growth trajectory that we're used to, we need to think beyond growth. the problem of the finance headwinds, which I hope we've demonstrated thus far we are capable of overcoming. Let me turn to the next page and let Chris take you through financing.

So yeah, just on page 26, just on financing, just as a reminder, on the balance sheet, we have 1.21 billion of unsecured borrowings. That is in three bonds. So June 26, 400 million euros comes due. That is essentially refinanced. We have the cash plus RCF to be able to repay that, and we have that cash earmarked for that. So that is done. November 28, we have £465 million outstanding at a 1.75%. That is our last refinancing of what I call legacy debt. It's been great. It's been fantastic. But we need to take that journey back up to market. So £465 million comes due in November 28. I'll guide you now to, we will refinance that in autumn of 27. And that is factored into all of our forecasting, et cetera, to still outrun that, still grow FFO and get through that journey. January 32 we have 350 million outstanding at 4% that was a bond we issued in January this year for which we had around 2 billion of demand so we've got great support from the debt capital markets and obviously we also tapped the 28 bond in the summer for 105 million again great support for that issuance. We do remain below a benchmark issuer. So we're having investment grade rating that was reaffirmed by Fitch. But in the bond markets, over 500 million gets you to benchmark issuer size. The reason I flag that is because. At the point that we become a benchmark issuer, you should expect our marginal cost to start coming in a little bit as well, as we essentially become an issuer that investors need to look at as we go into those indices. On the secured side, £232 million with Berlin HIP and Deutsche PBB. That is secured out to 2030 on a portfolio of German assets at 4.25%. Net LTV is up at 38.3% at the period end, reflecting the acquisition activity during the period. Interest cover over four and a half times. Net debt to EBITDA 6.7 times, well below eight times where we target. As I say, we also signed a 150 million RCF in the period of BNP, HSBC and ABN AMRO. There is an accordion feature in there to be able to increase it by another 100 million. I have verbal indications of wanting to do that from banks. So we are in a strong position liquidity wise. And as well, as I said, we have a bond tap in the period. Page 27. I'll just summarize before handing over to Andrew to conclude. So I think what have we seen in this period? We've seen fantastic, strong organic growth, as well as acquisitive growth that is in the tank, which has partly come through in the period, but will really start to accelerate our performance in the second half and beyond. So 6.6% FFO growth. underpinned by that 5.2% like-for-like rent roll, but the 15.2% increase in total rent roll gives you the marker as to where we are heading. UK and Germany both performing well as discussed. And acquisitions we've touched on, we've increased the dividend by 4%. That is ahead of expectations. I think the market was only expecting between 1% and 2%. I think you should take that as a sign of confidence from Andrew and I and also our board in the future performance of this company. We want to continue to focus on generating cash flow, which we reward shareholders with through dividends. So I'd guide you to that kind of level of increase going forwards as well. We're in a strong position on the balance sheet side, 389 million unrestricted cash plus the RCF that's undrawn, 38% LTV, and we've touched on the bond and RCF earlier. I'll hand over to Andrew on 28.

Okay, so really the sort of second and third point here are all about the 5% growth. I just want to sort of cover something that I think is quite important because the group continues to trade in line with management expectations for the full year, but the cynics around the table might possibly look at the 5.2% like-for-like growth and compare it to the same period last year at 5.5% and think, actually, it's less than it was this time last year. And, of course, factually, you'd be absolutely correct. I wouldn't draw a great deal from that at all, because when we say that we're trading in line with expectations, we mean we're trading in line with expectations. And I would draw your attention to the half year in 2022, where in the first half of the year, we achieved 2.4% like for like growth. But what actually happened when we looked at the full year is we came out at nearly 6.5%. What we always do is try and make sure that our problems are stacked into the first half. If we have a lease that is a big move out that's due to go on March 31st, we'll try and push it years before it happens into April. When we're signing something new, if we know that it's a high proportion of a site, we will tend to make sure that the lease can only terminate in the first half of the year. We deliberately try and stack our problems into the first half to get a better and accelerating run in the second half. And if you look historically at our performance in H2 versus H1, you will see time and time again that our momentum accelerates in the second half. We would plan to be somewhere in between that 6% to 7% like for like for the year, probably somewhere around the mid-range of that. Please do not think... that because we're 5.2% this year and 5.5% last year, that there is some kind of slowing effect here. That is not what we are seeing, particularly given the momentum that we're anticipating in Germany. We accept things are going to get more difficult in the UK, but we believe that will be balanced out in Germany. And please let's not forget that what we have done here in this last six months is not just gone out and acquired €340 million of property, but we have continued to operate the company and do so well with a decent set of numbers. So one has not distracted the other. We have demonstrated the ability of the portfolio to do both and to do both well. And what I'd like to finish on is the 10-year track record of performance and growth where this company is concerned, in particularly at the top, the dividend, where we are now paying our 24th consecutive increase in dividend. And as Andrew Jones would say, dividend aristocracy is, I think, 25 years of progressively increasing dividend. We are now reaching the halfway point on that journey. Thank you very much. Happy to answer any questions people may have.

Thanks, Tim Leckie, Pamela Libram. Just two questions. I think one for Andrew, one for Chris. Andrew, the 15% sales conversion from inquiries, what's behind that? Is 15% the number you... Is that a final point or do we push on what you're thinking there? And then after that, for Chris, you mentioned the margin improvement. Once you hit the $500 million, could you just perhaps remind us where you see your current spread and what the improvement might be at that higher volume? Thanks.

So when we consistently get to 15%, yes, we definitely will push higher. You know, when I started in this company, sales conversion was less than 3% and when we started to target over 10% there was almost rebellion because people said it's impossible. We're now touching 15 and once we get above 15 that target will increase. How have we done that? Well, we've done that by working out the component parts that make up sales conversion and despite it not being broken, taking them apart, dismantling them, and looking at every individual piece and working out how we can do it better. And specifically, the piece that we are doing better that is improving our sales conversion is self-storage. And what we have worked out, and I'm not suggesting that we've worked out a better way of selling self-storage and self-storage specialists, not at all. but we have worked out a better way of doing it than we've been doing it in the past. And that is beginning to have a material difference on the overall sales conversion of everything we sell.

Chris, and on the margin, if I just take five years, five-year money, for instance, in the bond market, we are, because we are sub-benchmarked, then the margin has tended to move around a little bit in the range of 160 to 190, right? And it's been particularly volatile over the last week or two, given macro. I think the opportunity for us, once we're into benchmark, is to be at least probably 10 basis points tighter, but also less volatile. And we will, I would expect, start to come in towards the lower end of that margin range. So that's the margin over five-year swaps.

Hi, thanks. Morning. It's Tom Musson at Berenberg. Yeah, just again a question on conversion as it relates to the UK business, which I think is slightly under 9%. Have you got the same 15% conversion target for the UK as well, and is sort of achieving that a realistic prospect over time, or are there perhaps any sort of structural differences between the platforms and how they operate in the two different geographies? And then the second question, now that the UK business is larger and so FX becomes more of a consideration, would you consider using hedging instruments going forward?

I'll take the first part, if you take the second. So, firstly, the UK business has a 10% target. We didn't get to 15% from three in Germany by saying the target's 15%. We got there in incremental steps, and we broke the journey down. And we're into the journey to 10% with the UK business. The UK market is a different market from the German market. the UK market is more intermediated and from that perspective getting control of initial inquiry is more competitive than it is in Germany but interestingly enough the UK inquiry market is changing and it's changing faster than it's changing in Germany and it's changing specifically and faster because of the use of AI So what other operators may or may not realize is 25% of the property-based Google traffic of 12 months ago is now going through AI. And what that means is that a broker's life, particularly a web broker, is much, much harder. What that means is, whereas web brokers used to spend time talking to customers, customers are spending much less time talking to brokers and more time talking to AI. And when I say talking, I mean talking. Instead of typing and tapping into a screen, people are talking to their phones. And the AI mechanisms are bringing back the kind of conversation that normally would have happened in a call center broker type environment. So that whole thing in the UK is shifting. The only piece that isn't shifting is pay-per-click, PPC, because AI is not touching PPC at the moment because it's not trying to monetize itself. And what you really need to be doing if you are a smart operator that wants to keep control of your inquiry flow is you need to start understanding this because this is now moving and it's changing the passage of an inquiry, particularly inquiries for flexible space. an inquiry that, you know, instead of going through a web broker, is going through, not in every case, but in one in four cases, going through AI. And you've got to work out how you deal with that, because that is going to change the marketplace. So, of course, we're concerned about, you know, getting to 10%, etc. But actually, in the UK, what we're more concerned about is how we continue to capture inquiries. Because prospective inquirers of a certain size are now more interested in talking to an AI machine than they are talking to a broker or a call centre. Still, predominantly, the broker and the call centre has control But that control is tipping out of the broker's and the provider's interest and towards what I call mechanical AI systems. And we're going to need to know how to compete with that. So that will come to Germany, but it hasn't started to touch that market properly yet. You can see it much more clearly in the UK market. And that's why I say... Don't be confused about the fact that our inquiry numbers are going up. Our inquiry numbers are going up, not because we're sitting there. Our inquiry numbers are going up because we're going out and working other channels and doing things whereby we can take control earlier on rather than watch AI steal the bread from our table.

Chris? Okay, I've spent a lot of time on investigating hedging and my conclusion is that it's fraught with danger. And it's a drug which once we got into, it would be very hard to come off. So I think to manufacture hedging, be it buy forward euros, let's for instance say buy forward the entire UK portfolio to fix the value at the end of the financial year, for instance, At that point I would have to realise at the end of the financial year a gain or loss on the portfolio on that forward and I'd have to almost certainly roll that hedge and there'd be a significant cost to putting that hedge in place. And ultimately we are a business exposed to two markets so I'd be trying to manufacture the exposure to the UK out of the balance sheet when in reality we are exposed to two different markets. So going and putting in place some sort of derivatives to try and manage hedging. I've seen lots of CFOs get into all sorts of trouble trying to go down that road. And I don't want to be sitting here talking about, you know, the mark to market of derivative instruments every time I come and talk to you. We have a shareholder base which is spread across euro, sterling, rand and I'm sure some are dollar denominated as well. So investors who invest in us, I largely leave it to them to deal with hedging. Now, the only structural piece of hedging that could at some point make sense is simply to put sterling debt into the balance sheet. So match the debt with the asset base. And I completely understand that challenge and that question. There's two points I'd say. Number one, In Euro terms, we are still maturing on the balance sheet as an issuer in the debt capital markets, so there is still upside in terms of the cost of our Euro-denominated debt. Versus in sterling, we are certainly subscale to go into the debt capital markets for debt, so we would be forced down the secured lending route, which obviously creates much less flexibility from a balance sheet perspective. And obviously the difference in cost between EUR and sterling, I'm sure has probably blown out even further in the last few days, but was 200 basis points. Let's say it's between 200 and 250 basis points. There is a funding benefit to us through the FFO and we are ultimately cash flow focused from an FFO perspective. And what I'd also say is then when you look at the portfolio, we're split, I think, 71%, 29% at the moment between Germany, UK. With the acquisition activity that we expect going forwards, which we expect to be more German-focused, that balance will start to push more towards Germany again. So we will continue to be very much a minority exposed to the UK. So... I think my answer is no I'm not going to get on the kind of manufacturing hedging at some point in the future it will make sense to put sterling leverage in but we're on a journey at the moment and I know it's difficult at the moment given the FX effects that you see on the balance sheet that you know to sort of have a knee-jerk reaction and say oh we must hedge I think that's brought with danger we're not going to go there

Good morning, it's Matt Sapir from Peel Hunt. I'm also going to ask one question to each of you if I can. Andrew, I think on slide 9 you talked about the 4.7 like for like rate growth as a failure in as much as it was above the 4% that you were targeting. Are you going to ask your colleagues to do things differently going forwards or are you still happy for them to push rates ahead of what you might be targeting when it comes to new demand?

Well, specifically what we are saying more in the UK than in Germany is we need to increase our sales volume. And if we have to reduce price within certain parameters and corridors to do so, that's what we must do. And what we're seeing is we're seeing a lot of people sort of nod to that, but then kind of still favour price over occupancy. And therein lies our challenge. Because I think as things tighten in the UK, what we're seeing is we're seeing tenants look for smaller spaces than they normally would. And what that means is we have to win more customers than we normally would to maintain and increase our occupancy. And to do that, you either have to get more inquiries and or you have to improve your sales conversion. And one of not the only thing, but one of the ways you improve sales conversion is loosen on price a little. Now, all of that, you know, is in a very controlled environment where we make sure that people can't lower the price so much. that we start to bring the average rate per square metre or square foot in the UK of the portfolio down. But whereas we used to be in a very nice world where you just said, as long as you sell higher than they move out, it all works, now you're having to operate in a corridor whereby you do sometimes have to sell at lower than the move-out rate, and you'd better make absolutely sure that you can make up for that in your renewals and expansions Otherwise, you're going to start ticking the average rate per square metre of your portfolio down. So this is quite a delicate area. And in the UK, rather than Germany, this is going to get, you know, kind of more detailed going forward. And some of that is because the average size that people in the UK are inquiring about is getting smaller. So what you have to do is work the platform harder to get more customers. So this is not a sort of, you know, you set it and leave it for six months. This is daily management. You know, we have a professional sales force that's properly trained in specific methods with specific processes and systems that are managed on a daily basis, you know, and we're continually pushing buttons and pulling levers where this is concerned. It's quite intense.

Thank you. And Chris, on slide 18, you talked about a 25 million euro potential future new build programme. Yep. Two parts. One is sort of what timeframe are we talking about? And the second part, I'm assuming that's not exhaustive across the whole portfolio. There must be more opportunities.

No, no. So that's specifically four opportunities. That is one at Gartenfeldt. two at Klipphausen and one at our other Dresden site, Macropolis. The Gartenfeld opportunity new build is likely to tangibly start in the new year. um the dresden micropolis site is probably going to depend on not necessarily a firm pre-let but at least some very strong indication and the clip housing site i think we've talked about clip housing in the past it's it's been a sort of poster child for us of success and we have development land around the existing site which we acquired um at the time of original acquisition and there is opportunity to build additional production halls there Net-net, I think I'd guide you to the 25 million of opportunities. You're probably looking at 10 million per year actually coming through. So it is a separate bucket to our business as usual, CapEx. It's capital that has to compete with acquisitions for use, essentially.

Okay.

Morning. Just a quick one. I think this is Chris. On the Divi, you're at mid-70s payout, and then you've been medium-term guidance to 70%. I think previously when we've spoken, that was going to be in the mid-60s. So what's that change look like?

So we absolutely still have the aim to be a 65% payout ratio of FFO. And the model being 65% payout ratio plus the capex broadly equates to FFO as a whole. So we are therefore self-sustaining as a business. Actually, we are getting tighter and tighter on capex. So actually, we do have a little bit of headroom from capex versus dividend there. But we also flexed the payout ratio between 65% and 75% off the back of the fundraise, the equity fundraise last year and prior year to reflect the short-term dilution to FFO per share as we put the capital to work. So at the moment, you're essentially at kind of max. You're about 74 percent payout ratio. You should see that come down even at the end of the year and you should see it come down to settle around 70. What I'd also then say is that I think we are. so confident and the board so confident about the growth prospects of the business going forwards that we're also mindful that we're having to go through the financing headwinds as well over the next three years. So we are flexing within that 65 to 75 and saying that we want to settle around 70 and we'll get there over the next 18 months and we're happy, comfortable staying there through out to FY29. On that chart, you saw the waterfall to get from 123 to our new target of 175. The additional interest expense of 34 million is all of the additional interest expense. So that is the journey of refinancing done. And in fact, there is an additional small amount of additional debt in there as well. So that that is there is no more kind of headwinds to come beyond that, essentially. And then obviously, once the once that journey is done, the results will be free to really outperform.

So can I just pick up on that? Because there's nothing new in this. We've always for over a decade. operated in that 65 to 75 you know we've always made sure that when we are facing things like deployment of capital other types of headwinds that we flex up to 75 knowing that we can come back down to 65 again we're doing exactly the same the difference is what we are saying is that we recognize that we are unlikely to get back down to the 65% in until such time as we've overcome that interest rate challenge. And that ultimately won't be until the year ending March 29, because in December 28, we have another low interest bond to overcome. So realistically, we're going to be in that 70% to 75% corridor until we overcome that second bond. But once we do, the growth profile of this business will no longer have the headwinds. So therefore, you will really see the top come off it. And we'll then be able to return back to 65, you know, in a very sense. Whereas to try and do it in this period. You know, we think that that's unnecessarily, you know, kind of ambitious in terms of getting back to that 65. So we're operating in the same ways we've operated for for a very, very long time. We're just trying to give guidance to say, in the past, we've got down to 65, like, really quickly. You know, because of these successive headwinds, we are probably going to be in that 70 to 75 bracket. until we get to 29 and then we can put it back down to 65. Still a very well-covered dividend.

Yeah, very good.

Thanks. It's just a quick follow-up question. I think you talked – sorry, it's Max at Deutsche Nummers. You talked a bit about the UK previously and saying we kind of just need to wait until we get through the budget, but it sounds like from what you're saying – now that it's actually a bit more of a longer-term structural issue that's harder. And so investment in this market is unlikely to be until, I think you said, next summer.

Let me tell you why that's changed. That's changed as a result of Thursday of last week. It's changed because what we can all see now is the leadership of the current government is under threat. And I don't care if they all came out and said, we've made friends and we're all going to live happily ever after and not stab each other in the back. I won't believe it until I see the results of the May elections next year. And that roughly coincides with the announcement of our end of year results. So, you know, I'm not saying that we might not make the odd exception for a very small amount of money, you know, if it was something to do with defence or self-storage in the UK. But unless it's in like a really exciting vertical for an amazing price, as far as I'm concerned, we are paused in the UK now. until we understand the political outcome until at least the middle of next year.

Clear? Very clear, yeah. Very clear. Thank you.

Folks, thank you very much indeed.