Sirius Real Estate Ltd on Monday said annual profit nearly halved as costs soared, but the property investor still was able to boost its dividend.

For the financial year that ended March 31, the London and Johannesburg-listed company posted a 48% slump in pretax profit to €87.0 million from €168.9 million a year earlier.

Direct costs rose by around one third to €116.7 million from €87.7 million, while administrative expenses jumped by 26% to €48.3 million from €38.4 million.

But revenue was higher at €270.1 million, up 28% from €210.2 million, despite lower occupancy.

Total occupancy rate eased to 83.9% from 85.3%, reflecting a slight drop in like-for-like occupancy. Sirius explained that this was due to its focus on price in both Germany and the UK, as well as some recycling of mature assets into value-add assets with more vacancy and therefore opportunity.

Cash collection inched up to 98.6% from 98.4%.

Funds from operations increased by 37% to €102.1 million from €74.6 million, exceeding the five-year €100 million target set in 2018.

Sirius said its investment property book value increased by 1.1% to €2.12 billion as of March 31 from €2.10 billion a year before, thanks to income growth and investment, offsetting yield expansion.

For the second half, Sirius declared a dividend of 2.98 euro cents from 2.37 cents. This lifted the total annual payout to 5.68 cents, up 29% from 4.41 cents, in line with expectations.

Late last month, the company guided for total dividend of between 5.56 cents and 5.79 cents.

For the recent 12 months, earnings per share decreased by 49% to 6.82 cents from 13.48 cents, while headline EPS increased by 43% to 7.62 cents from 5.32 cents. Headline earnings are adjusted for revaluations, the gains and losses on the sale of properties, and recoveries from prior disposals of subsidiaries, among other adjustments.

‘Sirius has delivered another positive set of annual results, with sizeable rental growth underpinned by continued occupier demand for our high-quality and affordable products in both Germany and the UK,’ Sirius Chief Executive Andrew Coombs said.

Sirius said the new financial year has started well, driven by continued strong occupier demand, and it continues to trade in line with market expectations.

The company continues to assess further growth options in both Germany and the UK on an opportunistic basis, it said, including recycling of mature assets and reinvesting in value-add opportunities.

‘Organic growth opportunities remain strong, particularly with further investment into the portfolio as well as taking advantage of the high inflationary environment,’ Sirius said.

In London, Sirius shares were down 0.2% to 84.67 pence on Monday morning. The stock was flat at R 20.72 in Johannesburg.

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