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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tritax Eurobox Plc | LSE:BOXE | London | Ordinary Share | GB00BG382L74 | ORD EUR0.01 (EUR) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.02 | 3.28% | 0.63 | 0.621 | 0.639 | 0.62 | 0.62 | 0.62 | 355,304 | 16:35:02 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 79.89M | -223.36M | -0.2768 | -1.93 | 431.64M |
From Apr 2022 to Apr 2024
TIDMEBOX TIDMBOXE
RNS Number : 7263I
Tritax EuroBox PLC
06 December 2022
6 December 2022
Tritax EuroBox plc
RESULTS FOR THE 12 MONTHSED 30 SEPTEMBER 2022
Tritax EuroBox plc ("the Company") reports its results for the 12 months ended 30 September 2022.
Strong platform - optimising performance
Hot Features
Premium
Financial performance 30 September 30 September Increase/
2022 2021 (decrease)
Rental income EUR57.9m EUR43.9m 31.9%
Adjusted earnings per share
("EPS")(1) 4.24 cents 4.61 cents (8.0%)
Basic IFRS EPS(1) 7.28 cents 19.59 cents (62.8%)
Dividend per share 5.00 cents 5.00 cents -
Portfolio value(2) EUR1,765.6m EUR1,281.4m 37.8%
EPRA Net Tangible Assets
per share EUR1.38 EUR1.35 2.2%
IFRS NAV per share EUR1.32 EUR1.31 0.8%
Loan to value ("LTV")(3)
ratio 35.2% 13.3% 21.9 pts
Total Return 6.0% 14.3% (8.3) pts
Operational performance 30 September 30 September Increase/
2022 2021 (decrease)
Contracted annual rent(4) EUR74.3m EUR53.4m 39.1%
Like-for-like rental growth(5) 4.0% 2.4% 1.6 pts
Rent collection 100% 100% -
Weighted average unexpired 8.0 years 9.3 years (1.3) years
lease term
EPRA vacancy rate 0.3% 3.3% (3.0) pts
Adjusted EPRA cost ratio(6) 29.5% 28.5% 1 pts
(0.44)
Average cost of debt 1.46% 1.90% pts
Like-for-like valuation growth 5.6% 11.9% (6.3) pts
Like-for-like estimated rental
value growth 8.2% 4.0% 4.2 pts
Increase in rental income and cost efficiencies supporting future earnings growth and dividend cover
-- 31.9% increase in rental income to EUR57.9m, reflecting 4.0% like-for-like rental growth, asset management activity and acquisitions.
-- Adjusted EPRA cost ratio of 29.5%; Financial Year 2023 ratio expected to be c. 25%, driven by expected future income growth and estimated EUR2.1m annual savings from reduced management fee.
-- Adjusted EPS of 4.24 cents, down 8.0% primarily due to timing of deployment of prior year equity raise.
-- Dividend per share of 5.00 cents; covered in the quarter ending 30 September 2022 and expected to be fully covered for the Financial Year 2023.
Resilient investment portfolio let to strong customers on long-term inflation linked leases
-- Portfolio value EUR1,765.6m, up 37.8% (FY 2021 EUR1,281.4m), primarily driven by acquisitions in the period.
-- 5.6% like-for-like capital growth reflecting H1 2022 increase of 8.1% offset by 2.3% decrease in H2 2022.
-- 9.5% (EUR7.1m) portfolio reversion driven by like-for-like estimated rental value growth of 8.2%.
-- 97% of occupational leases subject to annual increases of which 82.6% linked to inflation. -- 99.7% occupancy and significant income visibility with 8.0 years WAULT.
Operational activity reinforcing portfolio resilience and ESG performance
-- Acquired nine high quality, sustainable assets at a net initial yield of 3.7% adding EUR20.2m p.a. to annual rent and benefiting from 11.2% reversion (EUR2.2m).
-- Development schemes totalling 31,200 sqm fully let producing EUR1.4m of annual rental income.
-- Four new leases signed totalling EUR5.1 million of annual rent, an increase of EUR0.8m (+18%) above previous rent or guarantees.
-- Awarded five Green stars and "Leader in Sustainability for European Industrial Distribution Warehouse Listed Sector" by GRESB, the global ESG benchmark for real estate.
Robust balance sheet with low and capped cost of debt - earliest maturity in Q4 2025
-- Issued private placement of EUR200m, at an average coupon of 1.37% and average maturity of nine years.
-- 100% of debt with fixed rates or caps, with a maximum average cost of debt of 1.46%. -- 4.5 years weighted maturity with earliest refinancing in Q4 2025. -- EUR239m of available liquidity from undrawn debt facilities at financial year end.
-- Significant covenant headroom with LTV of 35% and interest cover of 3.9x compared to covenant levels of 65% and 1.5x respectively.
Outlook
-- Structural tailwinds and favourable occupational market fundamentals expected to continue to support occupier demand and rental growth.
-- Macro factors expected to lead to further softening of asset values in the short term.
-- Robust balance sheet and resilient portfolio means the business is well placed to navigate a more uncertain market outlook.
-- Increased rental income and cost efficiencies will support earnings growth and dividend cover over the next financial year.
Robert Orr, Chairman of Tritax EuroBox plc, commented:
"Economic conditions have changed significantly since June, and our sector will not be immune to subsequent impacts. We will continue to monitor closely the more uncertain environment and remain attentive to the potential risk of weaker markets.
"However, our high-quality portfolio, strong customer base and robust balance sheet mean we are very well positioned to weather the economic headwinds we are facing. The lower cost base and additional revenues generated from operational activity, provide positive momentum to earnings going into 2023 and support a fully covered dividend going forward."
Presentation for analysts and investors
A Company presentation for analysts and investors will take place via a live webcast at 09.30am (GMT) today. To view the live webcast, please register at:
https://stream.brrmedia.co.uk/broadcast/634eb9d56815e65bb9fdbf94
Analysts and investors will also be able to listen to the event via a moderated conference call using the following details:
Phone number: +44 (0) 330 551 0200
Participant access: quote 'Tritax'
The presentation will be accessible on-demand later in the day from the Company website: https://www.tritaxeurobox.co.uk/investors/results-centre/.
Notes
1 See note 12 to the financial statements for reconciliation
2 Valuation under IFRS (excluding rental guarantees)
3 As per KPI definition
4 Including rental guarantee and licence fee
5 Adjusted for vacancy
6 Including licence fee income and rental guarantees, excluding exceptional lease surrender in Hammersbach
FOR FURTHER INFORMATION, PLEASE CONTACT:
Tritax Group
+44 (0) 20 8051 5070
Phil Redding
Mehdi Bourassi
Ian Brown / Jo Blackshaw (Investor Relations)
Kekst CNC (Media enquiries)
Neil Maitland/Tom Climie
+44(0) 7971 578 507 / +44(0) 7760 160 248
tritax@kekstcnc.com
Notes:
Further information on the Company is available at www.tritaxeurobox.co.uk
The Company's LEI is: 213800HK59N7H979QU33.
CHAIRMAN'S STATEMENT
Delivering resilience and strategic progress
The Company made good progress in 2022 with implementing its investment strategy, including completing the deployment of capital from the prior year's equity raise and continuing to extract value from the existing portfolio through active asset management and development. All investment, asset management and development activity has been fully aligned with our ESG strategy which has been reflected in improved overall ESG performance.
Strategic progress
Since IPO in 2018, we have focused on constructing a portfolio of best-in-class, modern logistics assets that are mission-critical to our customers, and concentrated in key locations in Western Europe's major supply chain corridors. At the year end, 99.7% of the portfolio was income producing and 97% of our leases included an element of annual uplifts. These efficient portfolio characteristics generate a secure and growing income stream that supports our policy of a providing an attractive dividend to shareholders.
During the year we further enhanced the portfolio, deploying EUR533 million into a mix of core, value-add and development opportunities, the majority of which offer the potential to improve future rental levels. In terms of development projects, we continue to carefully manage risk by funding pre-let schemes, seeking rent guarantees on speculative developments and by agreeing fixed-price contracts with leading developers, giving us certainty of project cost and delivery at a time of material shortages and elevated build cost inflation.
We made good progress with our asset management plans during the year, including handing over the major extension at Barcelona post year end and agreeing four new leases, further diversifying our customer base. In addition, the portfolio has inherent opportunities to create further income and value through lease extensions, lettings, reversions and additional development on unutilised plots of land. These initiatives will continue to drive earnings growth as they come to fruition.
ESG is deeply integrated in our investment philosophy and our approach to asset management. In recognition of our continued focus in this important area, we were pleased to achieve a further increase in our GRESB score, which now stands at 88 out of 100 compared to 82 in 2021 (GRESB average = 74; GRESB Peer Group average = 79). We were awarded five stars and designated as Leader in ESG for European Industrial Distribution Warehouse Listed Sector.
We were also awarded EPRA Gold Level certification for ESG reporting best practice in the first year of inclusion in the EPRA Sustainability Best Practices Recommendations.
Post year end, we agreed an amendment to the Investment Management Agreement with the Manager, which included a reduction in the management fee (backdated to August 2022). Further details are contained in the Manager's report. This will enable significant cost savings to accrue to the Company and consequently will benefit earnings, the EPRA cost ratio and will contribute to an expected covered dividend position going forward.
Financial performance
The portfolio was valued at EUR1.77 billion at the year-end (+37.8% on previous year), generating like-for-like capital and ERV growth of 5.6% and 8.2% respectively. The Company's EPRA NAV per share increased by 2.2%.
We declared quarterly dividends totalling 5 cents per share in respect of the year, in line with the prior year.
This performance contributed to a Total Return of 6% (2021: 14.3%), against our long-term average target of 9%.The decrease compared to last year is the result of a softening in capital values in the second half of the financial year.
For the full year, the total dividend represented 84.8% of Adjusted EPS. The trajectory in dividend cover is positive, with the dividend fully covered in the final quarter of the 2022 financial year. The full impact of this year's activities, completion of further rent enhancing initiatives over the course of the next 12 months, combined with the reduction to the Manager's fee and rigorous focus on costs, means that we believe we can achieve a fully covered dividend for full year 2023.
The Company benefits from a variety of debt sources, including bank facilities, a green bond and our first private placement, which we issued during the year. The interest on this debt is either fixed or capped and none of the facilities mature before Q4 2025. The year-end LTV was 35% or 41% including all our current funding commitments.
Governance
We were delighted to welcome Sarah Whitney as a Non-Executive Director with effect from 14 February 2022. Sarah was also appointed as a member of the Audit and Management Engagement Committees. Following a review of the Board and Committee composition, we are also pleased to announce that Sarah Whitney will succeed Keith Mansfield as Senior Independent Director ("SID") with effect from 6th December. Keith will continue as chair of the Audit & Risk Committee. Sarah brings over 35 years of senior executive experience advising international and UK organisations and boards on strategy, corporate finance, and real estate and economic development matters, as well as complementary non-executive expertise. Keith Mansfield remains Chair of the Audit & Risk Committee.
In September 2022, Nick Preston stepped down as Fund Manager of the Company, with Phil Redding appointed in his place. Phil was the Manager's Director of Investment Strategy prior to his appointment. He is highly experienced in the sector, with deep knowledge of continental European markets gained during 25 years at SEGRO plc. Nick was instrumental in establishing the Company and on behalf of the Board, I thank him for his valuable contribution.
The Board and Company held its annual strategy meeting in September to discuss the macroeconomic backdrop and ensure the Company's approach remains relevant now, and for the future. The Company has a high quality portfolio of assets, let to a diverse and strong customer base, and has significant balance sheet headroom. The conclusion of this exercise confirmed that the Board believes the Company has the right strategy and foundations in place to continue delivering for our shareholders.
The Board is pleased that it now meets the targets set out in the FTSE Women Leaders Review (which follows the Hampton-Alexander Review) and we are committed to meeting the targets set out in the Parker Review at the appropriate opportunity.
For further information on the Company's governance activities please refer to pages [--] and [--] in the Governance Report.
Outlook
Following a strong first half for European logistics markets in 2022, the macroeconomic backdrop changed significantly in the second half with the ECB responding to the elevated levels of inflation with a series of aggressive interest rate hikes. The knock-on impact of rising bond yields and debt costs, together with the increased likelihood of European economies experiencing a period of slower growth, has not yet been fully transmitted into real estate markets, with the scale and duration of adjustments to pricing and growth still uncertain.
We believe the structural tailwinds positively impacting the European logistics sector, particularly the growth of internet retail, remain in place and other demand drivers such as the need for supply-chain resilience and buildings that support ESG objectives, will continue to create additional sources of demand. Low vacancy rates and constrained supply of land also serve to underpin occupational market fundamentals.
However, we are cognisant of the recent declines in investment transaction volumes and evidence of a softening in asset pricing and we remain attentive to the potential risk of weaker occupational markets.
In these more uncertain times, the quality of our portfolio together with the strength of our balance sheet combine to provide the Company with the resilience and resources to navigate more volatile market conditions. In addition, the embedded indexation, reversion and asset management opportunities in the portfolio provide the ability to grow income and create value throughout the market cycle.
The actions taken this year to reduce costs, together with the full year impacts of new investments, indexation and the completion of the Mango extension, will also provide positive momentum to earnings, help lower the cost ratio and support a fully covered dividend for the next financial year.
Although we are taking a more cautious stance in terms of our outlook for market conditions, the Company remains well positioned for the future with a resilient portfolio and strong balance sheet enabling us to navigate a more uncertain macroeconomic backdrop.
Robert Orr
Independent Chairman
5 December 2022
OUR MARKET
Market fundamentals remain supportive
Strong rental growth across core continental European markets
The European logistics market continues to see a wide range of different businesses demanding warehouse space. This is reflected in the Tritax EuroBox Summer 2022 Occupier Survey1, which showed that 89% of respondents expected to occupy the same or more space over the next three years.
The primary structural trends driving this long-term demand are:
-- The growth of e-commerce, requiring companies to redefine their supply chain which often involves having large and highly automated logistics facilities, close to major population centres and strong transport links.
-- The need to optimise, reinforce and de-risk supply chains, to ensure their efficiency and resilience to external shocks.
-- The growing necessity for businesses to operate from sustainable properties that will remain fit for purpose for years to come.
Global events such as the pandemic and heightened geopolitical risk have accelerated these trends in recent years.
Warehouse space is fundamental to successfully fulfilling e-commerce sales as companies require large, flexible, modern, and well-located properties to rapidly and efficiently deliver orders and manage returns. While year-on-year growth rates and the speed of online adoption across Europe will vary, the multiyear trend remains upwards. We expect to see further growth in the future with e-commerce as a percentage of retail sales expected to grow from 16% in 2021 to 20% in 20262 and reach 30% by 20303.
Supply chains used to be optimised for efficiency, productivity, and cost, but resilience is now equally critical. Companies are adopting the latest supply chain planning tools, reviewing manufacturing locations and transportation networks, and holding more critical stock closer to customers and end users. Our Tritax Eurobox Occupier Survey showed that 38% of respondents expect to hold more stock over the next three years1. These changes may cause companies to redesign parts of their supply chains, and in doing so, create demand for new buildings. We believe this will favour newer, well-located and technically capable buildings of the type we own.
The sustainability of their properties is increasingly at the forefront of occupiers' thinking. In addition to reducing their environmental impacts, occupiers want a workspace that promotes employee wellbeing to help them attract and retain staff. Energy generation and use is also in focus. Roof mounted solar PV is increasingly desirable and by occupying assets built with state-of-the-art design and materials, incorporating low carbon technologies and energy efficiencies, occupiers can further minimise their environmental footprint. Demand for clean energy will also increase as companies decarbonise their transportation. This will place new pressures on warehouse sites, such as generating clean energy and providing charging points.
Real estate market fundamentals and investment markets
Strong levels of take up
We continued to see strong demand for warehouse space during the 12-months to September 20224. Belgium, Germany, Italy, Poland, and Spain all experienced record levels of take up across the period. Take up in Germany totalled 8.4m sqm, up 6% on a like-for-like basis5. With vacancy rates in many markets at or close to record lows, occupiers have been left with a limited number of options through which to satisfy new logistics requirements.
Demand continues to emerge from a wide variety of sources including more traditional distribution-led requirements, as well as to meet e-commerce needs. We are also seeing companies supplement their distribution facilities with buffer buildings, to ensure the end-to-end supply chain continues to function independent of any external shock. Eurostat data showed inventory in Europe increased by EUR171bn across H1 20226.
In the short-term, the economic environment and its impact on consumer demand could affect leasing decisions. The extent to which this impacts the market will be determined by the depth and length of any economic slowdown. At the same time, we believe the logistics market will be somewhat insulated by several factors; tight market conditions, planning/zoning constraints, build costs, and debt availability will likely limit new supply. The tightness of markets and mission-critical nature of many logistics buildings will make occupiers hesitant to give up space and in the context of the wider business, occupational costs are not excessive. Supply chain reinvention, ecommerce trends and the focus on ESG are also multiyear trends around which companies make long-term investment decisions.
Supply remains constrained
Completions of new space increased to 19.2m sqm in the 12-months to Q3 2022, up from 15.2m sqm a year earlier5. New buildings are frequently the only route occupiers can use to find space and as a result, these developments have been rapidly absorbed and have not increased overall vacancy (see below).
The availability of modern, vacant buildings remains low across our core European markets. There are also a limited number of undeveloped sites available in these markets that can accommodate the very largest logistics facilities, and municipalities are often reluctant to zone land for the construction of assets of this scale. As a consequence, companies looking for very large new logistics facilities have few choices. In addition, developing new buildings has become increasingly challenging during 2022 as financing costs, cost-price inflation, land and power availability have all become further barriers to development. Against this backdrop, we expect development activity to slow in 2023, which will be a positive influence for market fundamentals.
Vacancy
National vacancy rates are at or close to record lows. Vacancy rates in many core logistics sub-markets are often even lower. Barcelona for example, has a vacancy rate of 3.9% (Spain: 5.6%) and in the A12/E19 corridor in Belgium just 0.1% of space is vacant (Belgium: 1.5%)5.
Rental growth
Prime headline rents have increased across all our eight core European markets in the 12-months to Q3 2022 with many sub-markets seeing double digit rental growth. Growth has also become more widespread with markets in peripheral countries such as Poland and Sweden seeing strong increases in the period5.
The market environment has helped logistics asset owners to selectively improve lease terms, as well as rental levels. This is an important development in Europe, given high inflation. One particular benefit has been the ability to agree new leases that more fully capture inflation, rather than having caps included.
Capital markets
This year, the investment environment for all asset classes has shifted in response to central banks raising rates to address the inflationary environment. Debt costs have increased as a result, impacting the returns available to investors on leveraged acquisitions. Wider capital market conditions have also shifted, with logistics yields increasing through the second half of the year.
Real estate transactions have slowed since Q2 2022 but total industrial/logistics transaction volumes across our core European markets were EUR42 billion for the 12-months to September 2022, up 32% on the previous year(7) . Limited recent activity is making price discovery challenging. CBRE prime market yields for September 2022 have typically moved out by 35-60bps from their Q1/Q2 2022 lows(5) .
Reported yields are CBRE's best estimate for a prime, rack-rented building in each market. However, many buildings have reversionary potential because of the healthy recent rental growth, which leases have often failed to fully capture. Pricing for these assets may therefore not directly reflect 'market' levels, as there may be scope for additional income growth.
While global capital markets remain volatile, real estate pricing will continue to be impacted by the macro drivers that currently dominate. In the medium-term, however, we believe that logistics real estate remains a compelling area for investment. High-quality real estate forms the backbone of the global economy and logistics real estate is one sub-sector that is central to this premise.
1 Source: 2022 European real estate logistics census 2 Source: Morgan Stanley, Global Ecommerce Growth Forecast, 2022 3 Source: Eurocommerce, European E-Commerce Report 2022
4 European data used in this report considers the following markets: Belgium, France, Germany, Italy, Netherlands, Poland, Spain, and Sweden unless otherwise stated
5 Source: CBRE 6 Source: Eurostat
7 Data includes transaction volumes in the Czech Republic, Hungary, Romania, and Slovakia as well as our eight core markets. Source: CBRE
MANAGER'S REPORT
Our approach to investment and portfolio management
Our strategy is to create value at the point of acquisition and throughout the lifecycle of the asset, by intelligent stock selection and proactive asset management. This strategy is underpinned by a disciplined approach to capital allocation, a commitment to ESG and appropriate financing.
We will continue to construct a portfolio which is diversified by geography and customer, that generates a secure level of inflation-linked income, as well as containing opportunities to capture capital growth. This will in turn support the dividend and total returns the Company is targeting.
The Company's Investment Policy determines the type of assets we want to acquire. We also make strategic choices about the countries we want to invest in, recognising that European logistics is not a single market and that there is considerable variation between countries and in the type and quality of logistics properties available.
Our investment criteria
Our approach to stock selection is described in our investment policy which governs our acquisition strategy. We focus on large, high-quality logistics assets which are typically:
-- Well-located in established distribution hubs, within or close to densely populated areas.
-- In locations with limited supply, that are likely to benefit from structural changes in occupational demand.
-- Fulfilling a key part of the occupiers' logistics and distribution supply chain. -- Benefiting from index-linked leases.
When reviewing potential acquisitions, we also consider:
-- Transport connectivity, the availability of labour and operational considerations such as power supply and data connectivity.
-- The physical characteristics of the building, including its ESG credentials, configuration, layout and flexibility for a wide range of occupiers.
-- The duration of the lease, potential for future rental growth, and the ability to capture this growth.
-- The customer's financial strength; the capital expenditure the customer has committed to the asset, and the role the asset will play in the customer's operations.
-- The potential for asset management and value-adding initiatives during and at the end of the lease term.
A modern, diversified and resilient portfolio
At the year end, the portfolio comprised 24 assets, which were well diversified by building size and occupier, and situated in the core European countries of Belgium, Germany, Italy, the Netherlands, Poland, Spain and Sweden. These assets are key to our customer partners' logistics and distribution supply chain needs, and have the following characteristics:
-- Modern , with 85% of the portfolio having been built in the last ten years, helping to ensure that the buildings meet the latest operational and ESG needs of occupiers;
-- Large , with 65% of the portfolio assets being in excess of 50,000 sqm and an average size of 60,000 sqm;
-- Sustainable , with 92% of the standing assets by floor area covered by Green Building Certifications or Energy Performance Certificates;
-- Secure income , with around 75% of the Company's 36 customers being multi-billion Euro businesses, including some of the world's best-known companies;
-- Inflation protection , with 97% of the Company's rental income including annual uplifts, 54% benefitting from uncapped CPI linkage, and 14% benefiting from indexation which is fixed;
-- Embedded income growth , potential to capture 9.5% (EUR7.1m) reversion potential across the portfolio through asset management; and
-- Long leases , resulting in a WAULT at the year end of 8 years, the unexpired lease terms at the year end ranged up to 24 years.
The Company made good progress with all elements of its strategy during the year, as set out below.
Expanding our high-quality portfolio
The Company's investment strategy is focused on creating a portfolio that provides a balanced exposure to core, stabilised assets with a managed exposure to value-add situations, which have the potential for higher returns. The investments made during the year reflect this approach and included income-producing investment acquisitions, pre-let development fundings, speculative development fundings and development projects. All the acquisitions are fully aligned with our ESG strategy and also provide the opportunity to meet or exceed our targets through integration with our existing asset management plans.
Date Location Acquisition Acquisition Rent Strategic
price and detail rationale
NIY
Stabilised Assets
Oct Gelsenkirchen, Acquired Asset comprising
2021 North Rhine for EUR32.2 three newly * In place rents of EUR76 psm * Strong rental growth potential due to location
Westphalia, million built units,
Germany at a NIY totalling
Close to Essen, of 3.7% 16,632 sqm. * Rental guarantee at EUR69 psm * Expect to let unit at elevated rent due to
in the most One of the constrained local supply
populous state three units
in Germany was vacant,
with a rental
guarantee
in place.
This unit
was let in
September
2022.
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Nov Piacenza, Acquired 47,800 sqm Average of
2021 Emilia - for EUR49.7 asset with EUR44 per * Stabilised asset in strong location
Romagna, million, strong ESG sqm, which
Italy Major at a NIY credentials, is below
logistics of 3.7% let to an prevailing * Leased off low rents
hub, close Italian fashion headline
to Piacenza brand as rents of
to the south its European EUR47 per
of Milan distribution sqm
hub
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Pre-let Development Funding
Nov Bönen, Acquired Leased at
2021 North Rhine for EUR117.9 * Agreed to acquire land and fund development of a EUR62 psm. * Strong rental growth potential, due to premium
Westphalia, million, 66,065 sqm building logistics location
Germany at a NIY
Located in of 3.5%
the densely * Asset pre-let for 15 years to a leading global
populated logistics provider
economic
heartland
of Germany
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Feb Roosendaal, Acquired Rent reflects
2022 North Brabant, for EUR144.3 * Agreement to forward fund 113,179 sqm development, a low rate * Long-term lease to leading food retailer
Netherlands million, which will be developed in three phases, divided in of EUR45
Prime logistics at a NIY to psm, relative
location in of 3.5% three units to the local * Potential to capture further expected rental
Southern market rental increases, with rent review allowing rent to increas
Netherlands levels of e
* All three units have been pre-let to Lidl Logistics over EUR50 to the prevailing open-market level if the customer
BV, on a single lease expiring in November 2027 psm extends lease in 2027
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Speculative Development Funding
Nov Settimo Acquired Speculative Subject to
2021 Torinese, for EUR24.4 forward funding 12-month * Transaction reflects an attractive NIY which is
Turin, million agreement rental guarantee accretive to the Portfolio
Piedmont, at a NIY for a highly from completion
Italy of 4.7% specified (expected
Adjacent to and sustainable in Q4 2022), * Expect to lease building swiftly during construction
the A4 28,291 sqm based on at or in excess of ERV
Turin-Trieste logistics a rate of
motorway, warehouse EUR45 per
east of Turin sqm. * Ability to control leasing in rising rental market
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Nov Rosersberg Acquired Acquired Subject to
2021 I, Stockholm, for SEK first plot 12 month * Strong and strategic location
Sweden 284 million of land at rental guarantee
Established (EUR27.9 Rosersberg, from completion,
logistics million) to fund the based on * Expect to lease the asset quickly and ahead of the
hub, north at a NIY speculative a EUR84 psm underwritten rental levels
of Stockholm of 4.2% development rental guarantee
and adjacent of a 13,181
to Arlanda sqm prime
International sustainable
Airport logistics
asset
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Jan Rosersberg Acquired Acquired
2022 II, Stockholm, for SEK second plot * Subject to 12 month rental guarantee from completion, * Strong and strategic location
Sweden 402 million of land at based on a EUR77 psm rental guarantee
Immediately (EUR39.4 Rosersberg,
adjacent to million) to fund the * Expect to lease the asset quickly and ahead of the
site acquired at a NIY speculative underwritten rental levels
in November of 4.0% development
2021 of a 17,832
sqm prime
sustainable
logistics
asset
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Mar Dormagen, Speculative Market rental
2022 North Rhine * Acquired for EUR76.4 million forward funding * 18-month rental guarantee from the developer, at levels are
Westphalia, of a new EUR69 psm. expected to
Germany 36,437 sqm exceed the
Between * Reflects a NIY of 3.3%, base logistics rental guarantee,
Düsseldorf d on the rental guarantee asset * Market rental value of circa EUR71 psm. giving the
and Cologne income opportunity
to capture
value on leasing
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Income producing land bank with redevelopment potential
Apr Malmö, Acquired Aggregate
2022 Skåne, for SEK * Speculative brownfield redevelopment scheme, post-development * Redevelopment scheme provides access to future
Sweden 223 million totalling 95,000 sqm of development land rental value development profits
Located between (EUR21.4 expected
Malmö's million) to be >SEK
two major at a NIY * Atria Group will occupy the existing site, paying 46 million * Attractive income yield during the predevelopment
ring roads, of 5.4% rent of SEK 13 million (EUR1.25 million) pa (EUR4.4 million) phase
to the south pa
of the city
centre * Redevelopment to commence in early 2024, with * Significant upside potential, with value of final
completion targeted in 2025 scheme expected to reflect a high margin above site
and construction costs
---------------- ----------------------------------- ---------------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Actively managing the portfolio
We undertake a rigorous bottom-up review of all our assets on a bi-annual basis to determine the optimum value-maximising strategy for each property and gain visibility on expected returns. This process also informs our recycling strategy by highlighting those assets where for example, we have completed our asset management plan and maximised the value creation potential of the asset.
In addition, we undertake a top-down review to ensure the portfolio is positioned appropriately to benefit from the positive structural drivers and underlying market fundamentals that continue to impact the Continental European logistics sector. This process also informs the recycling strategy, for example, by identifying markets where performance is expected to decline or where we have a sub-scale market position and gaining sufficient scale in an appropriate timescale will be challenging.
Asset management and development activities: capturing embedded value
The strategic tilt towards a greater exposure to value add and development assets announced a year ago is bearing fruit and is providing us with additional opportunities to unlock value from the portfolio.
To create and successfully implement our asset management strategies requires us to have close relationships with and a deep understanding of our customer partners and their businesses and objectives. This is achieved through multiple interactions from within the in-house asset management team, through our external asset management partners and by way of specific initiatives such as our annual customer satisfaction survey.
Examples of our activities during the last year included the following:
Completed development
-- Bornem, Belgium. During the year, we completed this speculative scheme on the previously vacant land and agreed a nine-year lease to an online grocery retailer (see below). The development was completed at a yield on cost of 7.0% and the total profit of EUR7 million gave an attractive profit on cost of 70%.
Speculative developments
At the year end, the Company had four forward funded speculative developments, as described below:
-- Rosersberg I, Stockholm, Sweden. We received a building permit for the 13,000 sqm phase 1 facility in December 2021 and construction began in February 2022, with practical completion expected in December 2022. Discussions are under way with potential occupiers, with letting agents appointed.
-- Rosersberg II, Stockholm, Sweden. The building permit for the 18,000 sqm second phase was received in May 2022 and construction began in June 2022, with practical completion expected in June 2023. Discussions are under way with potential occupiers.
-- Settimo Torinese, Turin, Italy. Construction of this 28,000 sqm asset is ongoing with practical completion revised from Q4 2022 to beginning of Q2 2023. The marketing campaign to identify occupiers is progressing.
-- Malm ö, Sweden. Planning and design work is progressing well and the application for a building permit is targeted for Q1 2023. We continue to engage with the wider development team and leasing agents to firm up on potential scheme designs.
Post year end planned developments
-- Oberhausen, Germany. The developer is completing the process of obtaining the final permit for this 23,000 sqm logistics project, which will enable the Company to acquire the site, this is forecast to be by the end of 2022. Development is planned to commence in August 2023 with practical completion of the scheme anticipated to be in August 2024.
Pre-let developments
The Company had two pre-let forward funded developments under construction at the year-end:
-- Bönen, Germany. Demolition and ground works completed in the first half of the year and building construction began in April 2022. Practical completion of the scheme is targeted for June 2023.
-- Roosendaal, the Netherlands . The first phase is complete and income producing, with construction of the remaining two phases on schedule for completion in April 2023.
Completed extension developments
-- Barcelona, Spain. Construction of the 94,000 sqm extension completed in the second half of the year and is forecast to be handed over on budget and on schedule on 25 November 2022. This new extension will be incorporated into the existing lease, which runs until December 2046. The Company financed the construction of the project at a yield on cost of 8.8% based on a capital commitment of EUR31.5 million.
-- Strykow, Poland. Construction of the 16,000 sqm extension reached practical completion in April 2022, with the lease running for five years at a headline rent of EUR647,427 per annum after an initial rent free period. The lease includes standard green clauses and annual indexation.
Potential extension developments
The Company has several land plots with development potential. These plots are zoned for logistics but would require additional permits to enable development to commence.
-- Wunstorf, Germany. The building has the capacity to be extended by 10,000 sqm. We continue to discuss proposals with our customer, Havi.
-- Geiselwind, Germany. This asset is Puma's global logistics centre. We are in discussions with Puma on a 42,000 sqm extension, which the Company would fund, and an associated lease extension.
-- Rome, Italy. The local authority has granted a building permit to construct further mezzanine extensions within this Amazon distribution centre.
-- Rumst, Belgium. This European distribution hub for Cummins Inc has a plot of land which could accommodate a 14,000 sqm development.
-- Strykow, Poland. There is further contiguous plot of land that could accommodate an additional extension of 9,000 sqm to the existing building. We are in discussions with an existing customer about expansion plans and a potential lease regear.
Growing income through indexation
The structure of rent review provisions within the majority of leases allows the portfolio to deliver inherent year-on-year rental growth. Rental uplifts are either indexed to local inflation measures or fixed at an agreed rate, with these increases most commonly being effected on an annual basis. 54% of the Company's occupational leases are exposed to uncapped indexation with 29% capped or other and 14% fixed. These review structures thereby offer considerable inflation protection and regular uplifts in income that supports the Company's aim of providing an attractive and growing dividend to shareholders.
Growing income through leasing
-- Nivelles, Belgium. In November 2021, the Company agreed a new nine-year lease on the vacant unit 2 to Associated Retail SA trading as Match Supermarkets, a leading Belgian convenience supermarket group. The initial rent reflects a headline rent of EUR47.30 psm (EUR794,000 per annum), which on a net effective basis is 8% above the rental level for unit 1 that was leased in October 2020. The rent will be subject to annual uplifts in line with the Belgian Healthcare Index. The scheme is now fully let.
-- Bornem, Belgium. In March 2022, the Company signed a nine-year lease to an online grocery retailer on the recently developed 14,935 sqm unit. The warehouse rent of EUR48 psm (EUR716,880 per annum) is 7% above the agreed rental guarantee and 17% above the previous letting of the adjacent building signed in March 2019. The lease includes break options in years 3 and 6 and annual indexation to the Belgian Healthcare Index.
-- Hammersbach, Frankfurt, Germany. The Company agreed a new lease on this 43,000 sqm building to B+S GmbH Logistik, a leading German third-party logistics provider. The seven-year lease has a five-year customer extension option, at a rent of EUR69 psm (EUR3,056,999 per annum) on the warehouse space, an increase of 24% on the previous rent. In addition, as part of the transaction other lease terms have been improved including moving the indexation provision to capture 100% of CPI annually and including a market rent review if B+S exercises the extension option at the end of the 5th year.
-- Gelsenkirchen, Germany. The Company agreed a five-year lease on this 7,045 sqm unit to ETC Group, a new customer, at a warehouse space rent of EUR73 psm (EUR514,595 per annum). This is 6% above the rental guarantee level. The new lease contains an indexation provision of 100% of CPI annually and the inclusion of standard green clauses.
Implementing our ESG strategy
The new additions to the portfolio during the year have further enhanced the portfolio's already strong ESG credentials. In particular:
-- Gelsenkirchen, Bönen and Dormagen: These brownfield sites will be redeveloped with the aim of achieving DGNB Gold standard.
-- Settimo Torinese: The asset will be developed to BREEAM Very Good standard.
-- Piacenza: The two units have BREEAM In-Use Very Good and BREEAM In-Use Excellent ratings, respectively, and a roof-mounted photovoltaic system.
-- Rosersberg I and II: The developments are targeting a minimum of BREEAM Very Good and will include energy saving initiatives and staff wellbeing measures.
-- Roosendal: The scheme is aiming for a BREEAM Very Good certification and incorporates ESG initiatives that provide social and environmental benefits for staff and the locality.
-- Malmo: The development will target a minimum certification of BREEAM Very Good.
We continue to investigate and implement solar renewable energy projects across our portfolio. We have ten solar energy projects implemented, at Rome, Bornem (x3), Rumst (x2), Piacenza, Breda and Nivelles (x2). Eight more projects are in the feasibility pipeline, including adding PV panels to the building extension at Barcelona. Our existing solar projects are generating approximately 6.74MW of green electricity. The next phase of projects in our feasibility pipeline has the capacity to generate 20MW of solar energy.
We aim to include Green lease clauses in all new leases. The four leases listed adjacent all included our standard Green lease terms. These ensure the customer partner is committed to using the building in a sustainable way, for example by sharing data with us on energy, water consumption, waste management and recycling. There are now 9 Green leases across the portfolio, representing 18% of the portfolio by income.
Our TCFD & CRREM analysis has now given us the baseline data from which to further develop our asset management plans in relation to the mitigation of climate and carbon risk across our portfolio.
At Bornem, we contributed EUR42,000 towards increasing the external green areas by 240 sqm, installing a new bicycle storage facility and additional wellbeing facilities for visiting truck drivers. In return, we secured longer income by negotiating the removal of a customer break option in the lease.
We collaborate with our customer partners to manage and enhance biodiversity. Shortly after the year end, we began replanting the entire external area at the Barcelona asset, in conjunction with our customer, Mango and neighbouring owner VGP. The project will reintroduce native plant species, improve biodiversity and benefit a neighbouring bee farm.
In addition to asset-level community engagement, we have a corporate charity initiative with The Mission to Seafarers, which supports the 1.5 million people working at sea, as part of the global supply chain and logistics network. The Company is working with the charity to develop a long-term partnership to support social value and made EUR22,000 of funding available in October 2021 to purchase a mini-bus to help transport workers and crucial supplies.
Further improving our ESG ratings
The successful implementation of our ESG strategy has resulted in us consistently improving scores for the Company in key external benchmarks. We were pleased to achieve a further increase in our GRESB score, which now stands at 88 (GRESB average = 74; GRESB Peer Group average = 79). We were awarded five Green stars and designated as Leader in ESG for European Industrial Distribution Warehouse Listed Sector.
During the year, we were awarded EPRA Gold Level certification for ESG best practice in the first year in inclusion in the EPRA Sustainability Best Practices Recommendations.
In 2022, third-party specialist consultants undertook climate scenario risk modelling work across the whole portfolio and our management reporting and due diligence enabled strong assurance that all risks had already been considered, mitigation works completed and that appropriate insurance provisions are in place. Regular property inspections by our Property Management team also enables first hand checks and reporting.
FINANCIAL REVIEW
Portfolio valuation
The portfolio was independently valued by JLL as at 30 September 2022, in accordance with the RICS Valuation - Global Standards. The portfolio's total value at the year end was EUR1,765.6 million (30 September 2021: EUR1,281.4 million), with a like-for-like valuation increase of 5.6% during the year. The first six months of the financial year were marked by continuous yield improvement driving strong valuation growth. However, inflation and macro-uncertainties have forced central banks to tighten liquidity around the globe, leading to a marked increase in risk-free rates, and financing cost. This had the effect of reversing the property yield curve, with a like-for-like 29bps yield increase in the valuation of our portfolio between March and September. The Board recognises the 52% share price discount to EPRA NTA, as at 30 September 2022. The valuation of Investment Property is the main driver of the EPRA NTA, and was determined by JLL as independent valuers. The Board is satisfied that the valuation exercise was performed in accordance with RICS Valuation - Global Standards. As such, the Board has full confidence in the level of EPRA NTA disclosed in the financial statements at the reporting date.
Throughout the year, we witnessed continued strong occupational market conditions. The estimated rental value of the portfolio, which is the rent the portfolio should generate if all buildings were leased at current market levels, increased by 8.2% on a like-for-like basis over the year, and 2.7% since March 2022. This resulted in the portfolio's overall reversionary potential - the potential uplift from current rental levels - increasing to 9.5%.
Financial results
Rental income
Rental income for the year was EUR57.9 million (2021: EUR43.9 million), up 31.9%. The growth was primarily the result of portfolio growth from the equity raise in September 2021, as well as the benefit of rental indexation and our asset management initiatives. On a like-for-like basis against September 2021, rental income was 4.0% higher. As at 30 September 2022, the annualised rental income was EUR74.3 million (30 September 2021 EUR53.4 million).
The Company's operating and administrative costs were EUR18.2 million (2021: EUR12.2 million), which primarily comprised:
-- the Management Fee payable to the Manager of EUR7.9 million (2021 EUR5.5 million); -- the Company's running costs, including accounting, tax and audit; and -- the Directors' fees
On 6 October 2022, the Company and the Manager announced a number of proposed changes to the Investment Management Agreement (IMA), which were subsequently approved by shareholders at a general meeting on 25 October 2022. The amendments include a revised basis for calculating the Management Fee, which has been backdated to 1 August 2022. Prior to 1 August 2022, the Management Fee was calculated as follows:
Annual management
fee
(percentage
NAV of IFRS NAV)
---------------------------- -----------------
Up to and including EUR500
million 1.30%
Above EUR500 million and
up to
and including EUR2 billion 1.15%
Above EUR2 billion 1.00%
---------------------------- -----------------
The revised basis for calculating the Management Fee is as follows:
Annual management
fee
(percentage
NAV of IFRS NAV)
------------------------- -----------------
Up to and including EUR1
billion 1.00%
Above EUR1 billion 0.75%
------------------------- -----------------
In addition, property management services procured by the Manager will now be reinvoiced directly to the Company and, hence, fees relating to such services will be paid by the Company. The revised IMA results in meaningful savings for the Company, which in a full financial year we estimate at EUR2.1 million, based on the 30 September 2022 net asset value, which was the last available NAV prior to the announcement of the change.
The EPRA cost ratio for the financial year (inclusive of vacancy cost) was 41.3% (2021: 30.5%). The adjusted EPRA cost ratio was 29.5% (2021: 28.5%) which excludes the lease surrender payment at Hammersbach and includes rental guarantees. With the deployment of proceeds from our September 2021 equity raise into income producing assets, the portfolio is expected to generate greater income for the full year, combined with a lower cost base, we expect the cost ratio to decrease materially and stabilise at a percentage in the mid-20s.
The total cost of debt for the year was EUR8.7 million (2021: EUR7.1 million), reflecting an attractive average cost of debt of 1.2% (2021: 1.9%). This is the result of new debt entered into in the last 18 months (see debt financing below). Looking forward to FY23, the maximum average run rate cost of debt is 1.46%. Interest cover for the year was 6.6 times (2021: 6.3 times).
Profit before tax for the period was EUR76.6 million (2021: EUR129.0 million), including the gain on revaluation of the investment properties of EUR49.9 million (2021: EUR106.5 million).
The current income taxation charge for the year was 2.3% of the Company's net property income.
The taxation charge is primarily incurred in the local jurisdictions in which the Company invests. As an HMRC-approved investment trust, the Company is exempt from UK corporation tax on its chargeable gains. The Company is also exempt from UK corporation tax on dividend income received, whether from UK or non-UK companies, provided the dividends fall within one of the exempt classes under the Corporation Tax Act 2009.
The corporation tax rate in future periods will depend primarily on the jurisdictions where the Company acquires assets, given the differing tax rates across continental Europe. The Company does not use any structures designed to artificially reduce its tax liabilities and looks to pay the appropriate level of tax where it is due.
The Company's EPS measures for the year reflect some short-term dilution from the September 2021 equity issue, as we invested the proceeds in income-generating assets throughout the year.
Basic EPS for the year were 7.28 cents (2021: 19.59 cents) decreasing from the prior year due to significant valuation uplift in 2021. EPRA EPS, which primarily excludes the valuation movement, was 2.58 cents (2021: 2.75 cents).
Adjusted Earnings for the year were EUR34.2 million (2021: EUR24.7 million), resulting in Adjusted EPS of 4.24 cents (2021: 4.61 cents). Annualising the EPS generated in the quarter ending 30 September 2022, the EPS is 5.04 cents. More information about the calculation of basic, EPRA and adjusted EPS can be found in note 12 to the financial statements.
Net assets
The IFRS NAV per share at the year end was EUR1.32 (30 September 2021: EUR1.31). Information on EPRA's net asset valuation metrics can be found in the EPRA Performance Measures section.
Debt financing
During the year, the Company raised its debut private placement of EUR200 million senior unsecured notes, from institutional investors. The notes comprise three tranches with a weighted average coupon of 1.37% and a weighted average maturity of 9 years at drawdown. The funds were drawn in January 2022.
The three tranches comprise:
-- EUR100 million at a fixed coupon of 1.22%, with 7-year maturity; -- EUR50 million at a fixed coupon of 1.45%, with 10-year maturity; and -- EUR50 million at a fixed coupon of 1.59%, with 12-year maturity.
On 10 March 2022, the Company announced that Fitch Ratings Limited had upgraded its senior unsecured rating to BBB from BBB-. Fitch also affirmed the Company's Long-Term Issuer Default Rating at BBB- with stable outlook.
At the year end, the Company had total debt drawn of EUR11 million. This resulted in an LTV ratio of 35.2% (30 September 2021: 13.3%), with EUR239 million available undrawn debt. Taking into account the Company's capital commitments on its development and asset management projects, the proforma LTV increases to 40.6%. The Company's financing is well insulated from rising interest rates in the short term, with no maturities before Q4 2025, 73% of its total debt capacity fixed, and the part floating benefiting from interest rates caps limiting the rise in Euribor to 0.65%. These interest rates caps are maturing in October 2023.
Post period end activity
On 6 October 2022, the Company announced the proposed changes to the IMA, as discussed above.
[Others TBD]
Related party transactions
Transactions with related parties included the Management Fee paid to the Manager, the Directors' fees, and certain acquisitions the Company made from two of its main development and asset management partners, Dietz AG and Logistics Capital Partners (Dietz AG and Logistics Capital Partners were deemed related party under Listing Rules).
Alternative Investment Fund Manager (AIFM)
The Company is an Alternative Investment Fund within the meaning of the AIFMD and has appointed the Manager as its AIFM. The Manager is authorised and regulated by the Financial Conduct Authority as a full scope AIFM.
Dividends
The Company has declared the following dividends in respect of the year:
Declared Amount per share In respect of Paid/to be paid
---------------- ---------------- ---------------------- ----------------
1 October to 31
10 February 2022 1.25 cents December 2021 14 March 2022
1 January to 31
17 May 2022 1.25 cents March 2022 24 June 2022
1 April to 30 June
9 August 2022 1.25 cents 2022 9 September 2022
1 July to 30 September
6 December 2022 1.25 cents 2022 13 January 2023
---------------- ---------------- ---------------------- ----------------
The total dividend for the year was 5.0 cents per share or EUR40.3 million (2021: EUR30.7 million) and was 84.8% covered by Adjusted Earnings (2021: 80.2%). It was fully covered by Adjusted Earnings in the quarter ending 30 September 2022. We expect the dividend to be fully covered in FY23, as discussed in the Chairman's Statement.
Mehdi Bourassi
CFO for Tritax EuroBox plc
5 December 2022
KEY PERFORMANCE INDICATORS
Set out below are the key performance indicators we use to track our strategic progress
KPI and definition Comments Performance
1. Dividend per share Comments 5.00 cents
Dividends paid to Shareholders The dividend reflects our 2021: 5.00 cents
and declared in relation ability to deliver a growing
to the period. income stream from our
portfolio and is a key
element of our Total Return.
Our policy is to pay an
attractive and progressive
dividend, with the intent
to pay out 90-100% of our
Adjusted Earnings each
year, with a minimum payout
of 85% of Adjusted Earnings.
--------------------------------------- ------------------
2. Total return ("TR") Comments 6.0%
TR measures the change TR measures the ultimate 2021: 14.3%
in the EPRA Net Tangible outcome of our strategy,
Assets (EPRA NTA) over which is to create value
the period plus dividends for our shareholders through
paid. our portfolio and to deliver
a secure and growing income
stream. The Company's medium-term
TR target set at IPO is
9% per annum, by reference
to the IPO issue price.
--------------------------------------- ------------------
3. Basic net asset value Comments EUR1,065.8m
Net asset value in IFRS Basic Net Asset Value measures 2021: EUR1,053.5m
GAAP. the net value of the Company
under IFRS.
--------------------------------------- ------------------
4. Adjusted earnings Comments EUR34.2m
EPRA earnings, adjusted Adjusted earnings is a 2021: EUR24.7m
to include licence fees performance measure used
receivable on forwarded by the Board to assess
funded development assets our ability to generate
and for other earnings cash earnings from our
not supported by cash flows. portfolio, which ultimately
See note 12 to the financial underpins our dividend
statements payments.
--------------------------------------- ------------------
5. Loan to value ratio Comments 35.2%
(LTV)
The proportion of our gross The LTV measures the prudence 2021: 13.3%
asset value that is funded of our financing strategy,
by net borrowings (excluding balancing the additional
cash). returns and portfolio diversification
that come with using debt
against the need to successfully
manage risk. The Company
will maintain a conservative
level of aggregate borrowings,
with a medium-term target
of 45% of gross asset value
and a maximum limit of
50% (in each case, calculated
at the time of borrowing).
--------------------------------------- ------------------
6. Weighted average unexpired Comments 8.0 years
lease term (WAULT) The WAULT is a key measure 2021: 9.3 years
The average unexpired lease of the quality of our portfolio.
term of the property portfolio, Long lease terms underpin
weighted by annual passing the security of our income
rents. stream. The Company seeks
to maintain a WAULT of
greater than five years
across the portfolio, in
accordance with typical
lease lengths in Continental
Europe.
--------------------------------------- ------------------
7. Dividend cover Comments 84.8%
The dividend cover helps The dividend cover helps 2021: 80.2%
to indicate how sustainable to indicate how sustainable
a dividend is. It measures a dividend is. It measures
the proportion of dividends the proportion of dividends
supported by Adjusted Earnings which is supported by adjusted
earnings.
We expect the dividend
to be fully covered for
FY23.
--------------------------------------- ------------------
8. Interest cover Comments 6.62 times
The ratio of net property Interest cover is a measure 2021: 6.28 times
income to the interest of a Company's ability
incurred in the period. to meet its interest payments.
--------------------------------------- ------------------
9. Like-for-like rental Comments 4.0%
growth
Like-for-like rental growth This measures the Company's 2021: 2.4%
compares the growth of ability to grow its rental
the rental income of the income over time. Rental
portfolio that has been growth will not be linear
consistently in operation during the hold period,
and not under development with different mechanisms
during the two full preceding in each lease agreement.
periods.
--------------------------------------- ------------------
EPRA PERFORMANCE MEASURES
The table below shows additional performance measures, calculated in accordance with the Best Practices Recommendations of the European Public Real Estate Association (EPRA). We provide these measures to aid comparison with other European real estate businesses. For a full reconciliation of the new EPRA NAV measures, see the Notes to the EPRA and Other Key Performance Indicators.
KPI and definition Comments Performance
1. EPRA net reinstatement Comments EUR1,194.7m
value (EPRA NRV) A key measure to highlight 2021: EUR1,147.4m
Basic NAV adjusted for the value of net assets
mark-to-market valuation on a long-term basis. The
of derivatives, deferred metric reflects what would
tax and transaction costs be needed to recreate the
(real estate transfer tax current portfolio of the
and purchaser's costs). company.
---------------------------------- ------------------
2. EPRA net tangible assets Comments EUR1,111.0m
(EPRA NTA) Assumes that entities buy 2021: EUR1,086.5m
Basic NAV adjusted to remove and sell assets, thereby
the fair values of financial crystallising certain levels
instruments and deferred of unavoidable deferred
taxes (this excludes transaction tax.
costs).
---------------------------------- ------------------
3. EPRA net disposal value Comments EUR1,065.8m
(EPRA NDV) Represents the shareholders' 2021: EUR1,053.5m
Equivalent to IFRS NAV, value under a disposal
as this includes the fair scenario, where deferred
values of financial instruments tax, financial instruments
and deferred taxes. and certain other adjustments
are calculated to the full
extent of their liability,
net of any resulting tax.
---------------------------------- ------------------
4. EPRA earnings Comments EUR20.9m
Earnings from operational A key measure of the Company's 2021: EUR14.7m
activities. underlying results and
an indication of the extent
to which current dividend
payments are supported
by earnings.
---------------------------------- ------------------
5. EPRA net initial yield Comments 3.6%
(NIY)
Annualised rental income This measure should make 2021: 3.7%
based on the cash rents it easier for investors
passing at the balance to judge how the valuations
sheet date, less non-recoverable of portfolios compare.
property operating expenses,
divided by the market value
of the property, increased
with (estimated) purchaser's
costs.
---------------------------------- ------------------
6. EPRA topped-up NIY Comments 3.7%
This measure incorporates This measure should make 2021: 3.8%
an adjustment to the EPRA it easier for investors
NIY in respect of the expiration to judge how the valuations
of rent-free periods (or of portfolios compare.
other unexpired lease incentives
such as discounted rent
periods and step rents).
---------------------------------- ------------------
7. EPRA vacancy rate Comments 0.3%
Estimated market rental A "pure" (%) measure of 2021: 3.3%
value ("ERV") of vacant investment property space
space divided by ERV of that is vacant, based on
the whole portfolio. ERV, and includes rental
guarantees.
---------------------------------- ------------------
8. EPRA cost ratio Comments 41.3%
Administrative and operating A key measure to enable 2021: 30.5%
costs (Inclusive of vacant meaningful measurement
property costs) divided of the changes in a company's
by gross rental income. operating costs.
---------------------------------- ------------------
9. Adjusted EPRA cost ratio Comments 29.5%
EPRA cost ratio adjusted This ratio includes licence 2021: 28.5%
for non-operational items. fee income and rental guarantees
and excludes exceptional
items of a capital nature.
---------------------------------- ------------------
PRINCIPAL RISKS AND UNCERTAINTIES
The Board has overall responsibility for risk management and internal controls, with the Audit & Risk Committee reviewing the effectiveness of the risk management process on our behalf.
We aim to operate in a low-risk environment, focusing on the Continental European logistics real estate sector to deliver an attractive capital return and secure income for Shareholders. The Board recognises that effective risk management is key to Group's success. Risk management ensures a defined approach to decision making that decreases uncertainty surrounding anticipated outcomes, balanced against the objective of creating value for Shareholders.
Approach to managing risk
Our risk management process is designed to identify, evaluate, understand and mitigate (rather than eliminate) the significant risks we face. The process can, therefore, only provide reasonable, and not absolute, assurance. As an investment company, we outsource key services to the Manager, the Administrator and other service providers, and rely on their systems and controls. The Manager has established its own Risk Committee which ensures consistency and transfer of best practice in reporting, monitoring and controlling risk.
At least three times a year, the Board undertakes a formal risk review, with the assistance of the Audit & Risk Committee, to assess the effectiveness
of our risk management and internal control systems. During these reviews, the Board has not identified or been advised of any failings or weaknesses which it has determined to be material.
Covid-19 risks
1. The Covid-19 pandemic severely impacting the global economy and financial market may cause loss to the Company.
Property risks
2. Customers may default. 3. The value of the property portfolio may fluctuate. 4. Portfolio growth may slow. 5. Lack of diversification may amplify local risks. 6. Development activities may not be profitable.
Operational risks
7. The Company is reliant on the continuing services provided by the Manager. 8. Insurance at appropriate premiums may not be available.
Financial risks
9. Interest rates may fluctuate.
10. Debt funding at appropriate rates may not be available.
11. Debt covenants may be breached.
Taxation risks
12. A change in the Company's investment trust status may cause loss.
13. Changes to local tax legislation in countries in which the Company is invested may cause loss.
Political risks
14. General political and/or economic uncertainty may disrupt the Company's business.
15. Rising energy prices may impact the overall economy and our customers.
ESG risks
16. ESG risks and inability to capitalise on the opportunities could lead to loss of competitive advantage, higher vacancies and higher operating costs for the Company and its customers.
17. The company's data may be exposed to cyber attack.
Risk appetite
We have a specific Investment Policy, which we adhere to and for which the Board has overall responsibility.
Our risk appetite is low and, in particular, we do not undertake any fully speculative development. We have high-quality customer partners, with a portfolio of modern buildings and one of the longest unexpired lease terms in the sector, coupled with an average term to maturity on our debt of four years, all subject to interest rate derivative caps.
Principal risks and uncertainties
Further details of our principal risks and uncertainties are set out below. They have the potential to affect our business materially, either favourably or unfavourably. Some risks are currently unknown, while others that we currently regard as immaterial, and have therefore not included here, may turn out to be material in the future. The Board also continually reviews and assesses emerging risks, and has a process in place to decide their inclusion as principal risks.
Principal risks
The matrix below illustrates our assessment of the impact and probability of the principal risks identified, the rationale for which is contained within the commentary for each risk category.
Emerging risks
As well as the principal risks, the Directors have identified a number of emerging risks which are considered as part of the formal risk review. Emerging risks encompass those that are rapidly evolving, for which the probability or severity is not yet fully understood. As a result, any appropriate mitigations are also still evolving; however, these emerging risks are not considered to pose a material threat to the Company in the short term. These emerging risks are raised as part of the biannual risk assessment where the effects on the Group are considered. The emerging risks that could impact the Company's performance cover a range of subjects which include but are not restricted to climate change, ESG and technological advancement. The Audit & Risk Committee has also considered emerging risks following Covid-19 such as changes in the regulatory environment or tax regimes as a result of the pandemic.
COVID-19 RISKS
1. The COVID-19 pandemic severely impacting the global economy and financial market may cause loss to the Company
Probability Impact Mitigation
----------- ------------------------------------- -------------------------------------
Low Low Health and safety guidelines
The global economy and financial have been issued by the Manager
markets have been impacted by of the Company, our asset managers
the COVID-19 pandemic. This has and customers to all employees
had an adverse effect on the to ensure they are in a safe
magnitude and/or likelihood of working environment and that
several of the principal risks, they are aware of all relative
with the following potential symptoms of the virus. All staff
consequences: conducted checks to confirm they
A potential impact on the short-term were able to work from home remotely
operations of the business due to safeguard the undisrupted
to staff working remotely or continued operation of the business
potential absences because of and training has been undertaken
the virus. This includes the by all employees to make them
operation of both our asset managers aware of the potential increased
and customers whose staff could risk in cyber-crime.
be at a health and safety risk Over the previous 36 months the
through the continued operation Company has collected 100% of
of the warehouses. There is also contracted rents.
an increased risk in cyber-crime
due to remote working.
An overall reduction in revenue
due to the default of one or
more of our customer partners,
which could affect our ability
to pay dividends to Shareholders
and/or lead to a breach in our
banking covenants.
Customers requesting rent deferrals
and therefore impacting the capacity
of the Company to pay target
dividend in the current period.
An adverse change in our property
valuations which may lead to
a decrease in our Net Asset Value
and affect our ability to meet
our target returns. The significant
volatility in equity markets
could cause a decrease in the
share price, potentially causing
a breach in banking covenants,
which may force us to sell assets
to repay loan commitments.
----------- ------------------------------------- -------------------------------------
PROPERTY RISKS
2. Customers may default
Probability Impact Mitigation
----------- ------------------------------------ ------------------------------------
Low to Low to medium The Company selects assets with
medium The default of one or more of strong property fundamentals
the Company's customer partners (location close to population
would reduce revenue from the centres, access to infrastructure
relevant asset(s). There may and energy supply), which should
be a continuing reduction in be attractive to other customers
revenues until we find a suitable if the current customer partner
replacement customer, which may fails. In addition, while we
affect our ability to pay dividends focus on customer partners with
to Shareholders and/or lead to strong financial covenants, we
a breach in our banking covenants. also negotiate various guarantees
or deposits, to enable the Company
to cover income while looking
for a new customer.
While there is no restriction
on the Group's exposure to any
one customer partner, the Company's
Investment policy requires the
Company to deliver a high-quality,
diversified portfolio.
----------- ------------------------------------ ------------------------------------
3. The value of the property portfolio may fluctuate
Probability Impact Mitigation
----------- --------------------------------------- ---------------------------------------
Medium High As at 30 September 2022, our
Property valuation is inherently property portfolio was 97% cash
subjective and uncertain, and generating from leases, and rental
the appraised value of the Company's guarantees, with long unexpired
properties may not accurately weighted average lease terms
reflect the current or future of 8 years and a strong customer
value of the Group's assets. partner base. 97% of leases (by
In addition, the Company's due income) include rent uplifts
diligence may not identify all (with different features in each
risks and liabilities in respect country). Combined with the fact
of a property acquired, leading that we focus on the best locations,
to, among other things, an adverse where land supply is tight, and
change in the future valuation undertake significant due diligence
of that asset. using the services of relevant
An adverse change in the Company's third parties, we believe these
property valuation may lead to factors reduce the risk of significant
a decrease in our Net Asset Value adverse property valuation movements.
and affect the Company's ability
to meet the relevant target returns.
In an extreme scenario, it could
also lead to a breach of the
Company's banking covenants,
which may force the Company to
sell assets to repay loan commitments.
----------- --------------------------------------- ---------------------------------------
4. Portfolio growth may slow
Probability Impact Mitigation
----------- ------------------------------------- --------------------------------------
High Medium The Company's business model
The fundamentals of the prime is based on undertaking predominantly
logistics locations in Continental off-market transactions, sourced
Europe mean that the availability through the Manager's network
of land suitable for large logistics of contacts across Europe, and
properties is limited. In addition, through the Company's partnership
the Big Box sector currently with local development companies.
attracts a lot of new investors. The Manager has also developed
This results in acquisition yields strong relationships with several
that are currently at record vendors and customers in the
lows. industry. Our reliability, experience
This may restrict the Company's and speed of execution gives
ability to secure suitable logistics us an edge over many other potential
real estate assets in targeted investors.
countries in Continental Europe,
in order to grow our portfolio
while maintaining our target
returns.
----------- ------------------------------------- --------------------------------------
5. Lack of diversification may amplify local risks
Probability Impact Mitigation
----------- --------------------------------------- ---------------------------------------
Low Low The Company Investment Policy
The Company's Investment Policy requires us to deliver a high-quality,
does not include restrictions diversified portfolio of assets.
relating to the Group's exposure While the Company adopts a "bottom
to individual assets or customer up" approach in the selection
partners and includes only limited of real estate investments, it
restrictions relating to the also consider the impact on the
Company's exposure to individual concentration of risk within
countries. Significant economic the portfolio, including the
and/or political changes affecting Group's exposure to any single
a country the Group has invested country (considering its economic
in, or the Eurozone, generally, and political stability) at the
could have an adverse impact time of investment. Specifically,
on the income derived from investments the Investment Policy restricts
within said country and, hence, our ability to invest more than
on the valuation of those assets. 20% of Gross Assets (in aggregate)
This could lead to weaker overall in Austria, Czech Republic, Portugal
portfolio performance, both in and Slovakia.
terms of revenue generation and Over the past 18 months, the
value. Company has increased significantly
the size of the portfolio (by
number of assets, number of customers)
and entered the Nordics. This
led to a significant improvement
in portfolio diversification
and lower exposure to single
customers/buildings/countries.
----------- --------------------------------------- ---------------------------------------
6. Development activities may not be profitable
Probability Impact Mitigation
----------- ------------------------------------------------- --------------------------------------
Medium Low to medium As at 30 September 2022 there
to high Any forward funded developments are 6 forward funding developments
are likely to involve a higher in the portfolio The risks associated
degree of risk than is associated to forward funded projects is
with standing investments. This significantly reduced, as the
could include general construction developer takes on a significant
risks, delays in the development amount of construction risk and
or the development not being the risk of cost overruns (through
completed, cost overruns or developer/contractor a fixed price contract).
default. Funds for forward funded developments
In particular, inflation will remain with the Company and are
impact the costs of material only released to the developer
& supplies. This passes directly on a controlled basis, subject
into the cost of construction to milestones as assessed by
of development assets, as contractors the Company's independent project
are likely to pass on the increased monitoring surveyors.
costs.
Furthermore, there are supply
chain issues across Europe due
to the rising costs & the macro
environment which can lead to
delays in supplies being delivered
to complete developments.
If any of the risks associated
with the Company's developments
materialised, this could reduce
the value of these assets and
our portfolio.
----------- ------------------------------------------------- --------------------------------------
OPERATIONAL RISKS
7. The Company is reliant on the continuing services provided by the Manager
Probability Impact Mitigation
----------- -------------------------------------- ---------------------------------------
Low High Unless there is a default, either
The Company continues to rely party may terminate the Investment
on the Manager's services and Management Agreement by giving
its reputation in the property not less than 24 months' written
market, as well as the performance notice.
and reputation of the asset managers The Management Engagement Committee
appointed by the Manager (currently monitors and regularly reviews
LCP, Dietz and NCAP). the Manager's performance, including
As a result, the Group's performance, the performance of the key third-party
to a large extent, depend on service providers to the Group.
the Manager's abilities to source In addition, the Board meets
adequate assets, and to actively regularly with the Manager to
manage these assets, relying ensure it maintains a positive
on the local knowledge of the working relationship.
asset manager, where necessary.
Termination of the Investment
Management Agreement would severely
affect our ability to manage
our operations and may have a
negative impact on the Company's
share price.
----------- -------------------------------------- ---------------------------------------
8. Insurance at appropriate premiums may not be available
Probability Impact Mitigation
----------- -------------------------------------- --------------------------------------
Low to High The Manager uses an established
medium The Company relies on the Manager's broker in order secure insurance
experience in sourcing insurance for the Company's assets. The
in order to ensure assets are broker has relationships with
covered to the adequate level. a range of insurers which supports
Through both the impacts of COVID-19 both the ability to source insurance,
and the dynamics of the insurance and the competitiveness of pricing.
market, it has become harder The most recent renewal was completed
to secure insurance for the Company's in October 2022 this cover is
assets at appropriate pricing in place until October 2023.
levels. The Manager uses a block policy
The rising cost of insurance which covers all of the assets
may impact upon shareholder returns. under its management, and therefore
In an extreme scenario, the Company insures a significant scale of
may not be able to insure its assets which assists in competitive
assets at all which would create pricing.
significant financial and operational If insurance was unobtainable
risk. for a particular asset, there
may be opportunity for the Manager
to obtain cover on a limited
cover basis or potentially the
Customer may be able to procure
the insurance cover.
----------- -------------------------------------- --------------------------------------
FINANCIAL RISKS
9. Interest rates may fluctuate, and debt funding at appropriate level may not be available
Probability Impact Mitigation
----------- ------------------------------------------ ----------------------------------------
High Medium Currently, 73% of total debt
Interest on our revolving credit is subject to a fixed coupon.
facility ("RCF") is payable based The debt which is not subject
on a margin over Euribor. Any to a fixed coupon (RCF), is fully
adverse movement in Euribor could covered by interest rate caps.
affect our profitability and The Company has entered into
ability to pay dividends to Shareholders. interest rate derivatives to
The cost of raising new debt, hedge the direct exposure to
or refinancing existing debt movements in Euribor. These derivatives
may rise, impacting the Earnings cap the exposure to the level
Per Share and what is distributed to which Euribor can rise. The
to shareholders as dividends. Company aims to minimise the
level of unhedged debt whilst
also considering the average
level of drawn down RCF.
There is no debt maturing before
October 2025, limiting therefore
the short term impact of refinancing.
The Company is actively monitoring
interest rate options and will
take active steps to mitigate
the rising cost of interest where
possible.
----------- ------------------------------------------ ----------------------------------------
10. The Euro may fluctuate against other currencies of countries in which the Company operates
Probability Impact Mitigation
----------- --------------------------------------- -------------------------------------
Medium Low Sweden currently represents a
The Company operates in the Nordics, small value of the total portfolio,
exposing the Company to Foreign limiting the potential impact
Currency ("FX") movements between of FX movement on the portfolio.
EUR and SEK. The Company has conducted a thorough
The Company is exposed to three assessment of possible hedging
distinct FX risks: strategies and their effectiveness
a) The cost to complete a development, and impact on the Company. We
agreed in SEK, will vary as the take steps to translate any known
FX rates move. Variation in actual cashflows on developments into
costs may render developments the functional currency at the
unprofitable. appropriate time, to mitigate
b) The Euro value of the net risk of fluctuation and varying
assets of the Swedish assets costs.
will fluctuate subject to FX The Company continues to carefully
rates. monitor the size of the exposure
c) The rental income is received to SEK and will execute hedging
in SEK and is subject to FX when strategies at the appropriate
streaming cash up to the PLC. time.
----------- --------------------------------------- -------------------------------------
11. Debt covenants may be breached
Probability Impact Mitigation
----------- ---------------------------------- -----------------------------------
Low to Medium The Company continually monitors
medium If the Company was unable to debt covenant compliance and
operate within the respective performs stress tests. The Company
debt covenants, this could lead has significant headroom before
to a default and the debt funding there is a risk of a breach and
being recalled. This may result our covenants have a soft breach
in the Company selling assets feature, which enables the Manager
to repay loan commitments. to act and remedy in case of
breach.
----------- ---------------------------------- -----------------------------------
TAXATION RISKS
12. A change in the Company's investment trust status may cause loss
Probability Impact Mitigation
----------- ------------------------------------- -----------------------------------
Low to Medium The Board is ultimately responsible
medium If the Company fails to maintain for ensuring the Company adhere
approval as an Investment Trust, to the UK Investment Trust regime,
its income and gains will be and we monitor strict adherence
subject to UK corporation tax to the relevant regulations.
and it will be unable to designate The Company has also engaged
dividends as interest distributions. top-tier third-party tax advisers
to help monitor our compliance
requirements.
----------- ------------------------------------- -----------------------------------
13. Changes to local tax legislation in countries in which the Company is invested may cause loss
Probability Impact Mitigation
----------- ---------------------------------- ----------------------------------------
Medium Low The Board relies on top-tier
A change in local taxation status third-party providers to advise
or tax legislation in any of of any tax changes in every country
the countries we invest in may in which the Company invests
lead to increased taxation of in too. In addition, the Company
the Group and have a negative has been structured on a conservative
impact on the Company's profits basis, with reasonable internal
and returns to Shareholders. debt ratios, in line with international
transfer pricing requirements.
----------- ---------------------------------- ----------------------------------------
POLITICAL RISKS
14. General political and/or economic uncertainty may disrupt the Company's business
Probability Impact Mitigation
----------- ---------------------------------------- ----------------------------------------
High Medium to high The Company currently has Investment
Political and economic uncertainty Properties in 7 different countries
can lead to weakened economic within the EU. The diversification
growth which can lead to reduced reduces the risk of significant
demand for logistics warehouse political and/or economic uncertainties
and/or have an impact on the impacting materially the Company
Group's customers. .
The current geo-political uncertainties The Company has currently no
in Europe have led to severe Ukrainian or Russian customers
disruption to energy and supply or asset exposure.
chains, leading to significant It has a single asset in Poland,
inflation across the economy. 400kms away from the Ukrainian
border and representing less
than 3% of the Company total
income.
----------- ---------------------------------------- ----------------------------------------
15. Rising energy prices may impact the overall economy and our customers
Probability Impact Mitigation
----------- ---------------------------------------- ---------------------------------------
High Medium The Company is actively monitoring
A rise in energy costs can lead the geo-political situation,
to a contraction of the economy, and ready to take action if necessary.
hence reducing the overall demand A very limited number of the
for logistics assets, reducing Company's customers are exposed
potential rental growth. to heavy industry, where cost
It can also lead to the Company's of energy plays a significant
customer to have reduced profitability, role.
reducing the affordability of The Company performs a customer
rent, and in the worst case leading covenant assessment on a regular
to the inability to continue basis, to ensure that the credit
to operate. quality of the portfolio remains
very good, and that rent payments
are in line with the relevant
contractual obligations.
Finally, the Company is actively
reviewing the energy ratings
of the assets. The Company aims
to ensure these are as efficient
as possible.
----------- ---------------------------------------- ---------------------------------------
ESG RISKS
16. ESG risks and inability to capitalise on the opportunities could lead to loss of competitive advantage, higher vacancies and higher operating costs for the Company and its customers
Probability Impact Mitigation
----------- ---------------------------------------- -------------------------------------------
High Medium The Company's sustainability
The World Economic Forum (WEF) strategy addresses all the key
listed ESG risks as 4 out of risks for the Company in its
7 of its top risks in 2021. operations. It provides guidance
There are several ESG risks potentially to the Board and Manager to reduce
impacting the Company. Climate ESG risks to create value for
change and biodiversity loss all its stakeholders, including
are the principle environmental investing in more ESG focused
risks affecting the Company's assets, delivering lower operating
long-term ability to operate costs for customers and more
in its markets; the ability for secure returns for investors.
the Company's customers to source The Company ensures the assets
and retain the right labour skills that are invested in are well
and mitigating modern slavery located for labour supply and
in the Company's supply chains, the Company is developing initiatives
are the key social risks; and to support local employment opportunities.
the ability to be transparent The Board of Directors and the
and agile in managing the evolving Manager have undertaken ESG training
governance risks, such as diversity to ensure they have the right
and human capital management. awareness and skills to manage
ESG risks and opportunities.
----------- ---------------------------------------- -------------------------------------------
CYBER RISKS
17. The company's data may be exposed to cyber attack
Probability Impact Mitigation
----------- ---------------------------------------- ---------------------------------------
Low High Many Cyber-attacks and phishing
Cyber-attacks are becoming increasingly attempts are very basic in nature
sophisticated and have been more and are easily identified by
prevalent in recent years. The the Manager in the course of
use of IT is integral to the daily business. All staff of
Company's operations and a successful the Manager and Board are regularly
cyber attack could limit the going through training covering
Company's ability to operate. cyber risk.
Additionally, at times in the Additionally, the Manager has
reporting cycle the Company holds obtained Cyber control accreditations,
material and not yet publicly ensuring all cyber risk is mitigated
disclosed information. to the extent possible.
Any cyber attack could have financial,
operational and reputational
impacts on the Company.
----------- ---------------------------------------- ---------------------------------------
GOING CONCERN AND VIABILITY STATEMENT
The Group's cash balance as at 30 September 2022 was EUR90.18 million. It also had undrawn amounts under its debt facilities of a further EUR207 million at the reporting date. Of the Group's total facilities (RCF, Green Bond and USPP), EUR250 million mature in 2025, EUR500 million in 2026, EUR100m in 2029, EUR50 million in 2032 and EUR50 million in 2034.
The Group currently has substantial headroom against its borrowing covenants, with an LTV of 35% as at 30 September 2022 against a borrowing covenant limit of 65%. The Group's borrowings are unsecured, providing it with a deeper pool of liquidity and with more flexibility over its arrangements.
The Group also benefits from a secure income stream from leases with long average unexpired terms, which are not overly reliant on any one customer. This diversification mitigates the risk of customer default. As a result, the Directors believe that the Group is well placed to manage its current and future financial commitments and other business risks.
Having reviewed the Group's cash flow forecasts, which show that liabilities can be met as they fall due, the Directors believe that there are currently no material uncertainties in relation to the Group's ability to continue for a period of at least 12 months from the date of approval of the financial statements. The Board is, therefore, of the opinion that the going concern basis adopted in preparing the Annual Report is appropriate.
Assessment of viability
The period over which the Directors consider it feasible and appropriate to report on the Group's viability is the five-year period to September 2027. This was previously considered over a three-year period.
The period for this assessment is the same five-year time horizon as covered by the Group's financial forecasts and plans. This is considered to be the optimum balance given the age of the Group as well as the long-term nature of investment in property. The Directors confirm that they have no reason to expect any change in the Group's viability immediately following the period assessed.
The assumptions underpinning these forecast cash flows and covenant compliance forecasts were sensitised, to explore the Group's resilience to the potential impact of its significant risks, or a combination of those risks. The principal risks summarise those matters that could have a significant impact on the Group's ability to remain in operation and meet its current obligations.
While the principal risks assessed by the Directors could affect the Group's business model, the Directors do not consider that they have a reasonable likelihood of impacting the Group's viability over the five-year period to September 2027.
The Group's financial forecast include sensitivities including yield expansion, resulting in property valuation fall and the impact of cash flows and covenant compliance. This forecast has been further sensitised for the following scenarios:
1) The combined impact of three key customers defaulting without replacement, a 12 month delay in letting properties under development, along with a significant increase in Euribor.
2) Additional yield expansion resulting in further property valuation falls and the impact on debt covenants.
Viability Statement
The Directors confirm that they have carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.
Having considered the forecast cash flows and covenant compliance, and the impact of the sensitivities in combination, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the five-year period of their assessment to September 2027.
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2022
Year ended Year ended
30 September 30 September
2022 2021
Note EURm EURm
----------------------------------------------------- ---- ------------- -------------
Rental income 6 57.89 43.89
Service charge income 6 10.14 7.03
Other income 6 0.70 0.55
----------------------------------------------------- ---- ------------- -------------
Gross property income 6 68.73 51.47
Direct property costs 7 (16.53) (8.75)
----------------------------------------------------- ---- ------------- -------------
Net property income 52.20 42.72
Fair value gain on investment properties 14 49.94 106.46
Gain on disposal of investment property - 7.33
Administrative and other expenses 8 (18.18) (12.22)
----------------------------------------------------- ---- ------------- -------------
Operating profit 83.96 144.29
Net finance expense 10 (12.07) (14.54)
Effect of foreign exchange differences 8 0.20 (0.70)
Changes in fair value and realised loss on
interest rate derivatives 20 4.55 (0.05)
----------------------------------------------------- ---- ------------- -------------
Profit before taxation 76.64 129.00
Taxation 11 (17.87) (24.23)
----------------------------------------------------- ---- ------------- -------------
Profit for the year 58.77 104.77
----------------------------------------------------- ---- ------------- -------------
Other comprehensive income
Foreign currency translation differences -
foreign operations (6.30) 0.06
----------------------------------------------------- ---- ------------- -------------
Total comprehensive income for the year attributable
to the Shareholders 52.47 104.83
----------------------------------------------------- ---- ------------- -------------
Earnings Per Share (EPS) (expressed in cents
per share)
EPS - basic and diluted 12 7.28 19.59
----------------------------------------------------- ---- ------------- -------------
GROUP STATEMENT OF FINANCIAL POSITION
As at 30 September 2022
30 September 30 September
2022 2021
Note EURm EURm
------------------------------------------- ---- ------------ ------------
Non-current assets
Investment properties 14 1,765.60 1,281.38
Derivative financial instruments 20 4.43 0.05
Trade and other receivables 15 1.17 1.17
Deferred tax assets 11 2.11 0.24
------------------------------------------- ---- ------------ ------------
Total non-current assets 1,773.31 1,282.84
------------------------------------------- ---- ------------ ------------
Current assets
Trade and other receivables 15 31.43 17.24
Cash and cash equivalents 16 90.18 329.73
------------------------------------------- ---- ------------ ------------
Total current assets 121.61 346.97
------------------------------------------- ---- ------------ ------------
Total assets 1,894.92 1,629.81
------------------------------------------- ---- ------------ ------------ Current liabilities Trade and other payables 17 (38.80) (21.92) Income tax liability (0.60) (0.22) ------------------------------------------- ---- ------------ ------------ Total current liabilities (39.40) (22.14) ------------------------------------------- ---- ------------ ------------ Non-current liabilities Trade and other payables 17 (1.29) (1.40) Loan notes and borrowings 18 (701.07) (492.17) Deferred tax liabilities 11 (51.74) (33.30) Other liabilities 19 (33.62) (25.19) Customer deposit 23 (2.05) (2.11) ------------------------------------------- ---- ------------ ------------ Total non-current liabilities (789.77) (554.17) ------------------------------------------- ---- ------------ ------------ Total liabilities (829.17) (576.31) ------------------------------------------- ---- ------------ ------------ Net assets 1,065.75 1,053.50 ------------------------------------------- ---- ------------ ------------ Equity Share capital 24 8.07 8.07 Share premium reserve 597.58 597.46 Translation reserve (6.24) 0.06 Retained earnings 466.34 447.91 ------------------------------------------- ---- ------------ ------------ Total equity 1,065.75 1,053.50 ------------------------------------------- ---- ------------ ------------ Net Asset Value (NAV) per share (expressed in Euro per share) Basic NAV 25 1.32 1.31 EPRA NTA 25 1.38 1.35 ------------------------------------------- ---- ------------ ------------
The financial statements were approved by the Board of Directors on 5 December 2022 and signed on its behalf by:
Robert Orr
Chairman
Company registration number: 11367705
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2022
Share Share Translation Retained
capital premium reserve earnings Total
Note EURm EURm EURm EURm EURm
-------------------------------------- ---- -------- -------- ----------- --------- --------
At 1 October 2021 8.07 597.46 0.06 447.91 1,053.50
-------------------------------------- ---- -------- -------- ----------- --------- --------
Net profit for the year - - - 58.77 58.77
Other comprehensive income - - (6.30 - (6.30)
-------------------------------------- ---- -------- -------- ----------- --------- --------
Total comprehensive income - - (6.30) 58.77 52.47
-------------------------------------- ---- -------- -------- ----------- --------- --------
Contributions and distributions:
New share capital subscribed 24 - 0.14 - - 0.14
Associated share issue costs - (0.02) - - (0.02)
Dividends paid 13 - - - (40.34) (40.34)
-------------------------------------- ---- -------- -------- ----------- --------- --------
Total contributions and distributions - 0.12 - (40.34) (40.22)
-------------------------------------- ---- -------- -------- ----------- --------- --------
At 30 September 2022 8.07 597.58 (6.24) 466.34 1,065.75
-------------------------------------- ---- -------- -------- ----------- --------- --------
Share Share Translation Retained
capital premium reserve earnings Total
Note EURm EURm EURm EURm EURm
-------------------------------------- ---- -------- -------- ----------- --------- --------
At 1 October 2020 4.23 131.24 - 368.44 503.91
-------------------------------------- ---- -------- -------- ----------- --------- --------
Net profit for the year - - - 104.77 104.77
-------------------------------------- ---- -------- -------- ----------- --------- --------
Other comprehensive income - - 0.06 - 0.06
Total comprehensive income - - 0.06 104.77 104.83
Contributions and distributions:
New share capital subscribed 24 3.84 476.14 - - 479.98
Associated share issue costs - (9.92) - - (9.92)
Dividends paid 13 - - - (25.30) (25.30)
-------------------------------------- ---- -------- -------- ----------- --------- --------
Total contributions and distributions 3.84 466.22 - (25.30) 444.76
-------------------------------------- ---- -------- -------- ----------- --------- --------
At 30 September 2021 8.07 597.46 0.06 447.91 1,053.50
-------------------------------------- ---- -------- -------- ----------- --------- --------
GROUP CASH FLOW STATEMENT
For the year ended 30 September 2022
For the For the
year ended year ended
30 September 30 September
2022 2021
Note EURm EURm
--------------------------------------------------- ---- ------------- -------------
Cash flows from operating activities
Profit for the year 58.77 104.77
Gain on disposal of investment property - (7.33)
Changes in fair value of investment properties 14 (49.94) (106.46)
Changes in fair value of interest rate derivatives 20 (4.38) 0.05
Tax expense 11 17.87 24.23
Net finance expense 10 12.07 14.54
Spreading of customer lease incentives 6 (2.45) 0.46
Amortisation of capital contribution and lease
commissions 6 0.54 (1.01)
(Increase)/decrease in trade and other receivables (24.30) (4.07)
Increase/(decrease) in trade and other payables 15.06 3.61
Increase in other liabilities 8.37 5.27
--------------------------------------------------- ---- ------------- -------------
Cash generated from operations 31.61 34.06
Tax paid (0.92) (3.77)
--------------------------------------------------- ---- ------------- -------------
Net cash flow generated from operating activities 30.69 30.29
--------------------------------------------------- ---- ------------- -------------
Investing activities
Purchase of investment properties (288.41) (366.47)
Disposal of investment properties - 64.30
Disposal of assets held-for-sale - -
Improvements to investment properties and
development expenditure (144.79) (17.83)
Rental guarantees and developer licence fees
received 8.74 2.81
--------------------------------------------------- ---- ------------- -------------
Net cash flow used in investing activities (424.46) (317.19)
--------------------------------------------------- ---- ------------- -------------
Financing activities
Net proceeds from issue of Ordinary Share
capital 0.12 470.06
Loans received 18 206.48 676.45
Loans repaid 18 - (524.00)
Finance expense paid (8.96) (5.76)
Dividends paid to equity holders 13 (40.34) (25.30)
--------------------------------------------------- ---- ------------- -------------
Net cash flow generated from financing activities 157.30 591.45
--------------------------------------------------- ---- ------------- -------------
Net movement in cash and cash equivalents
for the year (236.47) 304.55 Cash and cash equivalents at start of the year 16 329.73 24.44 Unrealised foreign exchange gains (3.08) 0.74 --------------------------------------------------- ---- ------------- ------------- Cash and cash equivalents at end of the year 90.18 329.73 --------------------------------------------------- ---- ------------- -------------
NOTES TO THE CONSOLIDATED ACCOUNTS
1. Corporate information
The consolidated financial statements of the Group for the year ended 30 September 2022 comprise the results of Tritax EuroBox plc ("the Company") and its subsidiaries (together "the Group") and were approved by the Board for issue on 5 December 2022. The Company is a public limited company incorporated and domiciled in England and Wales. The registered address of the Company is disclosed in the Company Information.
The nature of the Group's operations and its principal activities are set out in the Strategic Report.
The financial information presented here does not constitute the company's statutory accounts for the periods ended 30 September 2022 or 2021 but is derived from those accounts. Statutory accounts for period ended 30 September 2021 have been delivered to the registrar of companies, and those for the year ended 30 September 2022 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Accounting policies
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards (UK-adopted IFRS) and the applicable legal requirements of the Companies Act 2006. The Group's financial statements have been prepared on a historical cost basis, as modified for the Group's investment properties and interest rate derivatives, which have been measured at fair value through the Group profit or loss.
The Group has chosen to adopt EPRA (European Public Real Estate Association - www.epra.com/finance/financial-reporting/guidelines) best practice guidelines for calculating key metrics such as net tangible assets (NTA) and earnings per share. The Group has decided to adopt EPRA NTA as its primary EPRA NAV measure. These are disclosed in notes 12 and 25.
2.1. Going concern
The Directors have prepared cash flow forecasts for the Group for a period of at least 12 months from the date of approval of the consolidated financial statements.
The assumptions underpinning these forecast cash flows and covenant compliance forecasts were sensitised, to explore the Group's resilience to the potential impact of its significant risks, or a combination of those risks. The Group's financial forecast include sensitivities including yield expansion, resulting in property valuation fall and the impact of cash flows and covenant compliance. This forecast has been further sensitised for the following scenarios:
1) The combined impact of three key tenants defaulting without replacement, a 12 month delay in letting properties under development, along with a significant increase in Euribor.
2) Additional yield expansion resulting in further property valuation falls and the impact on debt covenants.
The Group's cash balance at 30 September 2022 was EUR90.18 million. It also had undrawn amounts under its unsecured revolving credit facility ("RCF") of a further EUR207 million at the date of approval of these financial statements. Of the Group's total facilities (RCF, Green Bond and USPP), EUR250 million mature in 2025, EUR500 million in 2026, EUR100m in 2029, EUR50million in 2032 and EUR50 million in 2034. The loan includes financial covenants for loan-to-value ("LTV"), interest cover ratio ("ICR") and gearing. These covenants have been complied with throughout the year and up to the date of approval of these financial statements.
The LTV covenant is measured quarterly based on the property valuation as used in the consolidated financial statements. Based on the most recent valuation the Group retained headroom against a covenant limit, reporting 35% against the limit of 65%. LTV would breach 65% if the valuation of the Group's investment properties were to decrease by 45.9%, based off latest valuation.
The gearing covenant is measured quarterly based on consolidated total net borrowings to consolidated shareholders' funds. Based on the most recent reporting the Group retained headroom against the covenant limit, reporting 58% against the limit of 150%.
LTV and gearing covenants are measured using "Net Borrowings" which reduces the drawn debt by the Group's cash holdings at each measurement date.
The ICR covenant is measured as the ratio of the Group's consolidated earnings before income and tax, subject to certain adjustments, to consolidated net finance costs in respect of any measurement period, by reference to accounting income. Based on the most recent reporting, the Group was not in breach of covenant minimum, reporting 3.85 times which was above the 1.5 times minimum.
As a result of the above considerations the Directors forecast that covenant compliance will continue for at least the next 12 months.
Consequently, the directors are confident that the Group and the Company will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
3. Significant accounting judgements, estimates and assumptions
The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
3.1. Judgements
In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:
Business combinations
The Group acquires subsidiaries that own investment properties. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. Under the Definition of a Business (Amendments to IFRS 3 "Business Combinations"), to be considered a business an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The group applies the optional 'concentration test' in determining whether an acquisition is a business combination, where substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. Therefore, the Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property.
Where such acquisitions are not judged to be the acquisition of a business, they are not treated as business combinations. Rather, the cost to acquire the corporate entity is allocated between the identifiable assets and liabilities of the entity based upon their relative fair values at the acquisition date. Accordingly, no goodwill or additional deferred tax relating to pre-acquisition property valuation gains arises.
In the current and prior periods all acquisitions were accounted for as asset acquisitions as in all acquisitions substantially all of the fair value of the gross assets acquired were concentrated in a single asset.
Segment reporting
The Directors are of the opinion that the Group is engaged in a single segment business, being the investment in and development of European big box assets. The Directors consider that these properties have similar economic characteristics and as a result these individual properties have been reported as a single operating segment.
3.2. Estimates
Fair valuation of investment property
The fair value of investment property is determined, by an independent property valuation expert, to be the estimated amount for which a property should exchange on the date of the valuation in an arm's-length transaction. Properties have been valued on an individual basis. The valuation expert uses recognised valuation techniques, applying the principles of both IAS 40 and IFRS 13.
The valuations have been prepared in accordance with the Royal Institution of Chartered Surveyors ("RICS") Valuation - Global Standards January 2022 ("the Red Book"). Factors reflected include current market conditions, annual rentals, lease lengths and location. The significant methods and assumptions used by valuers in estimating the fair value of investment property are set out in note 14.
4. Summary of significant accounting policies
4.1. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company up to 30 September 2022.
Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. For acquisitions not considered business combinations, the cost of acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognised. Non-controlling interests are accounted for in section 4.5.
For each of the subsidiaries within the Group with non-controlling interests (see note 4 of the Company financial statements), the Group has issued put options to the non-controlling interest. The Group has adopted the anticipated acquisition method under which the underlying interests of the non-controlling interest are presented in the Group Statement of Financial Position and the Group Statement of Comprehensive Income as if they are already acquired by the Group.
The day-to-day operations of Fondo Minerva Eurobox Italy, are managed by Savills IM, ("Savills") in accordance with the requirements of the Italian REIF regime. The Company has control to replace Savills with another operator and therefore considers the investment to be a subsidiary under IFRS 10.
The results of subsidiaries where control is acquired or disposed of during the year are included in the Group profit or loss from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those of the Group.
All intercompany transactions and balances between Group companies are eliminated on consolidation. These consolidated financial statements include the financial statements of the Company and the subsidiary companies as listed in note 4 of the Company accounts.
4.2. Investment property and investment property under construction
Investment property comprises completed property that is owned or held under a lease to earn rentals or for capital appreciation, or both, and property under development where the Group intends to retain ownership on completion.
Investment property is recognised when it is probable that the future economic benefits that are associated with the investment property will flow to the entity and the cost of the investment property can be measured reliably. The cost of investment property includes potential payments under put options granted to non-controlling interests of subsidiaries which own investment property. Rent guarantees and top ups paid by a vendor to the Group to compensate the Group for vacant space or rent free periods are treated as part of the cost of the property acquired and offset the initial purchase consideration. Such receipts are included in the Group's Adjusted EPS in note 12. Transaction costs include transfer taxes, professional fees for legal and other services and other costs incurred in order to bring the property to the condition necessary for it to be capable of operating. Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair values are included in the Group profit or loss.
Investment properties under construction are financed by the Group where the Group enters into contracts for both pre-let properties and speculative development under a funding agreement. All such contracts specify a fixed amount of consideration. The speculative development risk is mitigated by having rental guarantees in place to mitigate this risk. Investment properties under construction are initially recognised at cost (including any associated costs), which reflect the Group's investment in the assets. Development payments made in line with funding agreements are recognised in additions. Subsequently, the assets are remeasured to fair value at each reporting date. The fair value of investment properties under construction is estimated as the fair value of the completed asset less any costs still payable in order to complete.
Additions to properties include costs of a capital nature only. Expenditure is classified as capital when it results in identifiable future economic benefits, that can be measured reliably, which are expected to accrue to the Group. All other property expenditure is expensed in the Group profit or loss as incurred.
The corresponding entry upon recognising lease incentives or fixed/minimum rental uplifts is made to investment property. For further details please see Accounting Policy note 4.8.1.
Investment properties cease to be recognised when they have been disposed of or withdrawn permanently from use and no future economic benefit is expected from disposal. The difference between the net disposal proceeds and the carrying amount of the asset at the point of disposal is recognised in the Group profit or loss in the year of retirement or disposal.
4.3. Assets held-for-sale
A non-current asset or disposal group is classified as held for sale when the carrying amount will be recovered principally through sale rather than through continuing use, it is available for immediate sale and sale is highly probable within one year. Such assets, or disposal groups are measured at the lower of the carrying amount and fair value less costs to sell and once classified as held-for-sale, the asset is no longer amortised or depreciated. Investment property that is classified as held for sale is held at fair value.
4.4. Financial instruments
Fair value hierarchy
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period.
4.4.1. Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:
Derivative financial instruments
Derivative financial instruments refer to interest rate caps purchased for hedging purposes which are initially recognised at fair value plus costs of acquisition and are subsequently measured at fair value. The Group does not apply hedge accounting and hence the gain or loss at each fair value remeasurement date is recognised in the profit or loss.
Amortised cost
The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position.
These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows which are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost being the effective interest rate method, less provision for impairment.
Impairment provisions for current and non current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss disclosed in the Group profit or loss. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.
4.4.2. Financial liabilities
The Group classifies its financial liabilities as amortised cost.
The Group's accounting policy for each type of financial liability is as follows:
Loans and borrowings
Loans and bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the year to repayment is at a constant rate on the balance of the liability carried in the Group Statement of Financial Position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payment while the liability is outstanding.
Extensions of bank borrowings under accordion options in the original facility agreement are treated as changes in estimated cash flows under the original financial liability.
Other non-derivative financial liabilities
Non-derivative financial liabilities are recognised initially at the date that the Group becomes a party to the contractual provisions of the instrument and are measured initially at fair value less initial direct costs and subsequently measured at amortised cost. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
4.5. Put option liabilities
Liabilities for put options held by non-controlling interests are initially and subsequently recognised at the present value of the exercise price of the option. This is taken to be the non-controlling interest's proportionate share of the current fair value of investment property, the carrying amount of other net assets plus the present value of anticipated payments to be made by the Group under dividend guarantees to the non-controlling interest.
Changes in the carrying amount of the put liability are recognised within finance expenses in the Group Statement of Comprehensive Income.
4.6. Forward funded pre-let investments
The Group enters into forward funding development agreements. For pre-let investments, the Group will enter into a forward funding agreement with a developer and simultaneously enter into an agreement for lease with a prospective customer willing to occupy the building once complete.
During the period between initial investment in a forward funded agreement and the rent commencement date under the lease, the Group usually receives licence fee income. Usually this is payable by the developer to the Group throughout this period and typically reflects the approximate level of rental income that is expected to be payable under the lease, as and when practical completion is reached. IAS 40.20 states that investment property should be recognised initially at cost, being the consideration paid to acquire the asset, therefore such licence fees are deducted from the cost of the investment and are shown as a receivable.
4.7. Dividends payable to Shareholders
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the Shareholders at an Annual General Meeting.
4.8. Property income
4.8.1. Rental income
Rental income arising from operating leases on investment property is accounted for on a straight line basis over the lease term and is included in gross rental income in the Group profit or loss. The lease term is the non cancellable period of the lease. Customer break clauses are assumed to be exercised unless it is reasonably certain at inception of the lease that the break will not be exercised. Customer lease incentives are recognised as an adjustment of rental revenue on a straight line basis over the term of the lease. Included in the straight-line basis are the effects of future fixed or minimum uplifts. Any contingent rental uplifts are excluded until the amounts are known. Initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same basis as the lease income. Rental income is invoiced, either monthly or quarterly in advance, and for all rental income that relates to a future period, this is deferred and appears within current liabilities on the Group Statement of Financial Position.
Amounts received from customers to terminate leases or to compensate for dilapidations are recognised in the Group statement of comprehensive income when the right to receive them arises. Similarly, amounts paid to customers to terminate leases are recognised in the Group statement of comprehensive income.
When the Group enters into a forward funded transaction, the future customer signs an agreement for lease. No rental income is recognised under the agreement for lease; once practical completion has taken place and the formal lease is signed, rental income commences to be recognised in the Group profit or loss.
4.8.2. Service charges and other income
Income arising from expenses recharged to customers is recognised in the period in which the compensation becomes receivable. Service charge and insurance premiums and other such receipts are included in the gross property income gross of the related costs, as the Directors consider that the Group acts as principal in this respect.
4.9. Finance income
Finance income is recognised as interest accrues on cash balances and short term deposits held by the Group. Interest charged to a customer on overdue rental income is also recognised within finance income.
4.10. Finance costs
Finance costs consist of interest and other costs that the Group incurs in connection with bank and other borrowings, and the holding of deposits in Euro bank accounts. All interest costs are expensed to the Group profit or loss in the period in which they occur on an effective interest basis and all loan issue costs paid are offset against amounts drawn on the facilities and are amortised over the term of the facilities.
The Group has elected not to capitalise interest on investment properties under development.
4.11. Taxation
The Company is approved by HMRC as an investment trust under Section 1158 of the Corporation Tax Act 2010.
In respect of each accounting period for which the Company continues to be approved by HMRC as an investment trust, the Company will be exempt from UK taxation on its capital gains. The Company is, however, liable to UK corporation tax on its income.
The Company should in practice be exempt from UK corporation tax on dividend income received, provided that such dividends (whether from UK or non-UK companies) fall within one of the "exempt classes" in Part 9A of the CTA 2009. The Company is also able to elect to take advantage of modified UK tax treatment in respect of its "qualifying interest income" for an accounting period referred to as the "streaming" regime. Under regulations made pursuant to the Finance Act 2009, the Company may designate as an "interest distribution" all or part of the amount it distributes to shareholders as dividends, to the extent that it has "qualifying interest income" for the accounting period. If the Company designates any dividend it pays in this manner, it is able to deduct such interest distributions from its income in calculating its taxable profit for the relevant accounting period.
The Company's status as an approved investment trust does not impact the taxation of its subsidiaries or the Group's liability to tax in the other countries in which the Group operates.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from "profit before tax" as reported in the Consolidated Statement of Comprehensive Income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting year.
Where corporation tax arises in subsidiaries, these amounts are charged to the Consolidated Statement of Comprehensive Income. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the balance sheet in the countries where the Group operates.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting year. The rates used in the calculation of deferred tax are in accordance with legislation where the Group operates.
The carrying values of the Group's investment properties are assumed to be realised by sale at the end of use. The capital gains tax rate applied is that which would apply on a direct sale of the property recorded in the Consolidated Balance Sheet regardless of whether the Group would structure the sale via the disposal of the subsidiary holding the asset, to which a different tax rate may apply. The deferred tax is then calculated based on the respective temporary differences and tax consequences arising from recovery through sale.
4.12. Provision
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
4.13. Foreign currency translation
The presentation currency of the Company is Euro. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. All entities in the Group, with the exception of Sweden , have Euro as the functional currency.
The assets and liabilities of Sweden are translated to the Group's presentational currency, Euro, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve.
Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date that the fair value was determined. Gains and losses arising on exchange are included in the profit or loss for the year, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly to equity, and any exchange component of that gain and loss is also recognised directly to equity.
5. Standards in issue
5.1. Standards in issue and effective from 1 October 2021
IFRS Phase 2 amendments for interest rate benchmark (IBOR) reform provide a practical expedient to account for changes in the basis for determining contractual cash flows of financial assets and financial liabilities as a result of IBOR reform. Under the practical expedient, entities will account for these changes by updating the effective interest rate without the recognition of an immediate gain or loss. This practical expedient applies only to such a change and only to the extent that it is necessary as a direct consequence of interest rate benchmark reform, and the new basis is economically equivalent to the previous basis.
There was no material effect from the adoption of the above and other amendments to IFRS effective in the year. They have no impact to the Group significantly as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.
5.2. New standards issued but not yet effective
There are new standards and amendments to standards and interpretations which have been issued that are effective in future accounting periods, and which the Group has decided not to adopt early. None of these are expected to have a material impact on the consolidated financial statements of the Group.
6. Gross property income
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
---------------------------------------------------------- ------------- -------------
Rental income 55.98 41.58
Spreading of customer incentives 2.45 2.62
Amortisation of capital contribution and lease commission (0.54) (0.31)
---------------------------------------------------------- ------------- -------------
Gross rental income 57.89 43.89
Service charges recoverable 10.14 7.03
Other income 0.70 0.55
---------------------------------------------------------- ------------- -------------
Gross property income 68.73 51.47
---------------------------------------------------------- ------------- -------------
The Group derives property income from the following countries:
Gross property income The (EURm) Belgium Germany Spain Italy Poland Netherlands Sweden Total ---------------------- ------- ------- ----- ----- ------ ------------ ------ ----- 30 September 2022 7.98 28.34 10.77 8.95 6.18 4.00 2.51 68.73 ---------------------- ------- ------- ----- ----- ------ ------------ ------ ----- 30 September 2021 6.27 19.32 9.30 7.06 6.77 2.19 0.56 51.47 ---------------------- ------- ------- ----- ----- ------ ------------ ------ -----
The undiscounted future minimum lease payments under non cancellable operating leases receivable by the Group are as follows:
Between Between Between Between
Less 1 2 3 4 More
than and 2 and 3 and 4 and 5 than
1 year years years years years 5 years Total
EURm EURm EURm EURm EURm EURm EURm
------------------ ------- ------- ------- ------- ------- -------- ------
30 September 2022 64.98 63.74 60.27 55.65 53.22 262.64 560.50
------------------ ------- ------- ------- ------- ------- -------- ------
30 September 2021 50.43 51.25 47.63 44.58 40.91 290.29 525.09
------------------ ------- ------- ------- ------- ------- -------- ------
The Group's investment properties are leased mainly to single customers, some of which have rental securities attached (bank or parent guarantees, cash deposit), under the terms of a commercial property lease. The majority have rent indexation that are linked to either RPI/CPI or fixed uplifts.
There are two customers representing more than 10% of rental income during the year (2021: two customers). As of 30 September 2022, one customer represented more than 10% of passing rent (2021: four customers).
7. Direct property costs
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
------------------------- ------------- -------------
Service charge expense 10.49 7.41
Other expenses 1.74 1.34
Lease surrender payment* 4.30 -
------------------------- ------------- -------------
Total property expenses 16.53 8.75
------------------------- ------------- -------------
*Payment to terminate existing lease
8. Administrative and other expenses
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
--------------------------------------------------------- ------------- -------------
Investment management fees1 11.86 7.88
Directors' remuneration (note 9) 0.32 0.24
Auditor's fees:
Fees payable for the audit of the Company's accounts 0.51 0.49
Fees payable for the review of the Company's interim
accounts 0.07 0.07
Fees payable for the audit of the Company's subsidiaries 0.12 0.12
--------------------------------------------------------- ------------- -------------
Total Auditor's fee 0.70 0.68
Corporate administration fees 1.80 1.17
Regulatory fees 0.12 0.09
Legal and professional fees 2.03 1.27
Marketing and promotional fees 0.70 0.59
Other administrative costs 0.65 0.30
--------------------------------------------------------- ------------- -------------
Total administrative and other expenses 18.18 12.22
--------------------------------------------------------- ------------- -------------
1 Investment management fees include fees payable to Tritax Management LLP for EUR7.88 million (30 September 2021: EUR5.46 million (see note 26). The remaining EUR3.98 million (2021: EUR2.42 million) were paid to asset managers and property managers.
The effect of foreign exchange differences for the year ended 30 September 2022 consists of unrealised foreign exchange currency loss of EUR0.28 million and offset by realised foreign exchange currency gain of EUR0.08 million (2021: unrealised foreign exchange currency loss of EUR0.74 million and offset by realised foreign exchange currency gain of EUR0.04 million).
Fees relating to the share issuances have been treated as share issue expenses and offset against share premium. The transaction costs related to the loan and borrowings have been treated as part of the arrangement fees for issuing the debt, of which EURnil million relates to fee payable to the auditors as non-audit services (2021: EUR0.07 million). The fees in relation to the acquisition of assets have been capitalised into the cost of the respective assets.
9. Directors' remuneration
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
------------------------------ ------------- -------------
Directors' fees 0.21 0.22
Employer's National Insurance 0.11 0.02
------------------------------ ------------- -------------
Total Directors' remuneration 0.32 0.24
------------------------------ ------------- -------------
A summary of the Directors' emoluments, including the disclosures required by the Companies Act 2006, is set out in the Directors' Remuneration Report.
Personnel
During the current and prior periods under review the Company did not have any personnel, besides the Directors of the Company.
10. Finance expense
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
--------------------------------------------------- ------------- -------------
Interest payable on loans and bank borrowings 6.76 5.24
Commitment fees payable on bank borrowings 1.13 1.56
Fair value movement on remeasurement of put option 0.90 4.93
Bank fees 0.80 0.32
One-off cost of bank loans 0.05 0.02
Amortisation of loan arrangement fees 2.43 2.47
--------------------------------------------------- ------------- -------------
Total finance expense 12.07 14.54
--------------------------------------------------- ------------- -------------
The total interest payable on financial liabilities carried at amortised cost comprises interest and commitment fees payable on bank borrowings of EUR7.89 million (30 September 2021: EUR6.80 million), of which EURnil was capitalised in both periods, and amortisation of loan arrangement fees of EUR2.43 million (30 September 2021: EUR2.47 million) of which EUR2.40 million (30 September 2021: EUR8.92 million) of the loan agreement fees was capitalised into the loan in the year (see note 18).
11. Taxation
a) Tax charge in the Group Statement of Comprehensive Income
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
------------------------------------------ ------------- -------------
Current taxation:
UK taxation - -
Overseas taxation-current year1 1.19 3.58
Overseas taxation-prior year adjustment - 0.11
Deferred taxation:
UK taxation - -
Overseas taxation 16.68 20.54
------------------------------------------ ------------- -------------
Total tax charge 17.87 24.23
------------------------------------------ ------------- -------------
1 2021 includes the capital gains tax on disposal of investment properties for EUR3.05 million.
The UK corporation tax charge of EURnil reflects the Company's intention to declare sufficient "qualifying interest distributions" to fully offset its "qualifying interest income" in the year in accordance with its status as an Investment Trust Company ("ITC").
In the 3 March 2021 Budget it was announced that, from 1 April 2023, the UK main rate of corporation tax will increase to 25%. Given that the Company's tax charge is EURnil, due to its status as an Investment Trust Company, there is no anticipated consequential effect on the future tax charge.
b) Factors affecting the tax charge for the year
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences are explained below:
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
-------------------------------------------------------- ------------- -------------
Profit before taxation 76.64 129.00
-------------------------------------------------------- ------------- -------------
Theoretical tax at UK corporation tax rate of 19%
(30 September 2021: 19%) 14.56 24.50
Losses where no deferred taxes have been recognised 2.52 1.92
Impact of different tax rates on foreign jurisdictions 2.50 0.14
Expenses not deductible for tax purposes 0.99 (1.47)
Impact of UK interest distributions from the Investment
Trust (2.65) (0.97)
Prior year adjustment to current tax (0.05) 0.11
-------------------------------------------------------- ------------- -------------
Total 17.87 24.23
-------------------------------------------------------- ------------- -------------
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
------------------------------------------------- ------------- -------------
Deferred tax assets:
Differences between tax and property revaluation 1.64 0.01
Tax losses carried forward 0.47 0.23
Other - -
------------------------------------------------- ------------- -------------
Total 2.11 0.24
------------------------------------------------- ------------- -------------
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
------------------------------------------------- ------------- -------------
Deferred tax liabilities:
Differences between tax and property revaluation 51.74 33.30
Other - -
------------------------------------------------- ------------- -------------
Total 51.74 33.30
------------------------------------------------- ------------- -------------
The amount of unutilised tax losses and tax credits for which no deferred tax asset is recognised in the profit and loss account was EUR9.6 million (2021: EUR6.12 million).
12. Earnings Per Share
Earnings per share ("EPS") amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Group by the weighted average number of Ordinary Shares in issue during the year. As at 30 September 2022 and 2021, there are no dilutive or potentially dilutive equity arrangements in existence.
The calculation of EPS is based on the following:
Weighted
Net profit average
attributable number of
to Ordinary Ordinary Earnings
Shareholders Shares 1 Per Share
For the year ended 30 September 2022 EURm '000 cent
--------------------------------------------------- ------------- ---------- ----------
Basic EPS 58.77 806,779 7.28
Adjustments to remove:
Deferred tax charge and capital gains tax
on disposal of investment properties (note
11) 16.68
Changes in fair value of investment properties
and investment property under construction
(note 14) (49.94)
Changes in fair value of interest rate derivatives
(note 20) (4.66)
--------------------------------------------------- ------------- ---------- ----------
EPRA EPS 20.85 806,779 2.58
Adjustments to (exclude)/include:
Rental income recognised in respect of fixed
uplifts (1.90)
Amortisation of loan arrangement fees 2.43
Unrealised foreign exchange currency loss (0.26)
Fair value movement on remeasurement of put
option (note 19) 0.05
Rental guarantee receipts and developers licence
fee excluded from property income-settled
via cash2 8.74
Lease surrender payment4 4.30
--------------------------------------------------- ------------- ---------- ----------
Adjusted EPS 34.21 806,779 4.24
--------------------------------------------------- ------------- ---------- ----------
Weighted
Net profit average
attributable number of
to Ordinary Ordinary Earnings
Shareholders Shares1 Per Share
For the year ended 30 September 2021 EURm '000 cent
----------------------------------------------------- ------------- ---------- ----------
Basic EPS 104.83 535,145 19.59
Adjustments to remove:
Deferred tax charge (note 11) 23.62
Changes in fair value of investment properties
(note 14) (106.46)
Changes in fair value of interest rate derivatives
(note 20) 0.05
Gain on disposal of investment property (7.33)
----------------------------------------------------- ------------- ---------- ----------
EPRA EPS 14.71 535,145 2.75
Adjustments to include/(exclude):
Rental income recognised in respect of fixed
uplifts (2.31)
Rental income deferred3 1.60
Amortisation of loan arrangement fees 2.47
Unrealised foreign exchange currency loss 0.68
Fair value movement on remeasurement of put
option (note 19) 4.32
Rental guarantee receipts excluded from property
income-settled via cash2 2.90
Rental guarantee receipts excluded from property
income-settled via contracted liability settlement2 0.28
----------------------------------------------------- ------------- ---------- ----------
Adjusted EPS 24.65 535,145 4.61
----------------------------------------------------- ------------- ---------- ----------
1 Based on the weighted average number of Ordinary Shares in issue throughout the period.
2 This is offset against the cost of investment properties.
3 Covid-19 rent deferral was received in full in 2021.
4 Capital investment to terminate an existing lease in Hammersbach to harness rental growth resulting in longer term value to the business - refer to note 7
Adjusted Earnings is a performance measure used by the Board to assess the level of the Group's dividend payments. The metric mainly adjusts EPRA earnings for:
i. Exclusion of non-cash items credited or charged to the Group Statement of Comprehensive Income, such as fixed rental uplift adjustments and amortisation of loan arrangement fees;
ii. Inclusion of licence fees which relate to cash received from developers during development periods, in order to access the land; and
iii. Inclusion of rental guarantee adjustments which relate to acquired assets with properties which have had an income guarantee attached to them as part of the acquisition of the asset. The rental guarantee is released (through a cash movement or contracted liability settlement) as Adjusted Earnings over the period of the lease which it is intended to cover or lease break. However, this release does not go through rental income in the Group Statement of Comprehensive Income, and as such an adjustment is made to recognise the receipt.
iv. Exclusion of exceptional items, considered as an expense under IFRS, which are capital in substance and nature and result in longer term value to the business.
13. Dividends paid
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
----------------------------------------------------- ------------- -------------
Final dividend in respect of year ended 30 September
2021
at 1.25 cent per Ordinary Share (30 September 2020:
1.10 cent) 10.08 4.65
First interim dividend in respect of year ended 30
September 2022
at 1.25 cent per Ordinary Share (30 September 2021:
1.25 cent) 10.08 5.28
Second interim dividend in respect of year ended 30
September 2022
at 1.25 cent per Ordinary Share (30 September 2021:
1.25 cent) 10.09 7.68
Third interim dividend in respect of year ended 30
September 2022
at 1.25 cent per Ordinary Share (30 September 2021:
1.25 cent) 10.09 7.69
----------------------------------------------------- ------------- -------------
Total dividends paid 40.34 25.30
----------------------------------------------------- ------------- -------------
Total dividends paid for the year 3.75 cent 3.75 cent
----------------------------------------------------- ------------- -------------
Total dividends unpaid but declared for the year 1.25 cent 1.25 cent
----------------------------------------------------- ------------- -------------
Total dividends declared for the year 5.00 cent 5.00 cent
----------------------------------------------------- ------------- -------------
On 6 December 2022 the Directors of the Company declared a fourth interim dividend in respect of the period from 1 July 2022 to 30 September 2022 of 1.25 cent per Ordinary Share, which will be payable on or around 13 January 2023 to Shareholders on the register on 16 December 2022.
Out of EUR40.34 million (30 September 2021: EUR30.73 million) dividends declared for the year, EUR8.79 million (30 September 2021: EUR6.04 million) is designated as interest distribution.
14. Investment properties
The Group's investment property has been valued at fair value by Jones Lang LaSalle Limited ("JLL"), an accredited independent valuer with a recognised and relevant professional qualification and with recent experience in the locations and categories of the investment properties being valued. The valuations have been prepared in accordance with the RICS Valuation - Global Standards January 2022 ("the Red Book") and incorporate the recommendations of the International Valuation Standards which are consistent with the principles set out in IFRS 13. In forming its opinion, JLL makes a series of assumptions, which are typically market related, such as yields and expected rental values and are based on the Valuer's professional judgement and the current tenancy of the properties.
The valuations are the ultimate responsibility of the Directors. Accordingly, the critical assumptions used in establishing the independent valuation are reviewed by the Board.
The total valuation fee incurred by the Group in the year amounts to EUR124,800 (period ended 30 September 2021: EUR75,400). The fee is not contingent on the valuation of the properties.
Other than Tritax EuroBox plc, the external valuer provides valuation and research - related services to the Tritax Group, as well as to other funds Tritax Group manages. The Directors ensure full independence of the valuer.
All acquisitions during the current and prior period have been treated as asset purchases rather than business combinations (see note 3.1).
During the year, the following investment properties were acquired:
Location Date acquired
----------------------- -------------
25 November
Settimo, Italy1 2021
29 November
Piacenza, Italy1 2021
30 November
Rosersberg, Sweden 2021
14 December
Gelsenkirchen, Germany 2021
14 December
Bönen, Germany 2021
14 January
Rosersberg II, Sweden 2022
Roosendaal, Netherlands 11 March 2022
Dormagen, Germany 26 April 2022
Malmo, Sweden 26 April 2022
----------------------- -------------
1 Acquired based on an asset deal.
Investment
Investment properties Investment
properties under properties
completed construction Total
EURm EURm EURm
--------------------------------------------------- ----------- ------------- -----------
At 1 October 2021 1,257.35 24.03 1,281.38
Acquisition of properties3 168.65 134.52 303.17
Additions to investment properties4 1.41 143.38 144.79
Transfer from investment properties to investment
properties under construction (1.30) 1.30 -
Transfer from investment properties under
construction to investment properties 70.17 (70.17) -
Licence fees and rental guarantees received (0.44) (14.31) (14.75)
Fixed rental uplift and customer lease incentives1 5.66 - 5.66
Amortisation of rental uplift and customer
lease incentives1 (1.35) - (1.35)
Change in fair value during the year2 46.87 3.07 49.94
Foreign exchange movement during the year (3.15) (0.09) (3.24)
--------------------------------------------------- ----------- ------------- -----------
As at 30 September 2022 1,543.87 221.73 1,765.60
--------------------------------------------------- ----------- ------------- -----------
Investment Investment Investment
properties properties properties
completed under construction Total
EURm EURm EURm
--------------------------------------------------- ----------- ------------------- -----------
At 1 October 2020 837.90 - 837.90
Acquisition of properties 372.56 - 372.56
Additions to investment properties 1.10 19.81 20.91
Transfer from investment properties to investment
properties under construction (8.10) 8.10 -
Transfer from investment properties under
construction to investment properties 10.19 (10.19) -
Licence fees and rental guarantees received (2.49) - (2.49)
Fixed rental uplift and customer lease incentives1 3.82 - 3.82
Amortisation of rental uplift and customer
lease incentives1 (0.81) - (0.81)
Disposal of properties (56.97) - (56.97)
Change in fair value during the year2 100.15 6.31 106.46
--------------------------------------------------- ----------- ------------------- -----------
As at 30 September 2021 1,257.35 24.03 1,281.38
--------------------------------------------------- ----------- ------------------- -----------
1 This balance arises as a result of the IFRS treatment of leases with fixed or minimum rental uplifts and rent free periods, which requires the recognition of rental income on a straight line basis over the lease term. The amount as at 30 September 2022 was EUR10.94 million (30 September 2021: EUR7.67 million). The difference between this and cash receipts changes the carrying value of the property against which revaluations are measured (also see note 6).
2 Included in the fair value change in the year were unrealised gains of EUR93.08 million (30 September 2021 : EUR107.34 million) and unrealised losses of EUR43.14 million (30 September 2021 : EUR0.88 million).
3 This Includes acquisition costs of EUR13.81 million (30 September 2021 : EUR3.69 million).
30 September 30 September
2022 2021
EURm EURm
-------------------------------------------------- ------------ ------------
Investment properties in Balance Sheet 1,765.60 1,281.38
Rental guarantee held in separate receivable 6.93 1.20
-------------------------------------------------- ------------ ------------
Total external valuation of investment properties 1,772.53 1,282.58
-------------------------------------------------- ------------ ------------
As at 30 September 2022, the Group had EUR123.7 million of outstanding capital commitments in relation to its forward funded development assets (30 September 2021: EUR32.4 million):
-- Roosendaal EUR30.0 million -- Dormagen EUR18.7 million -- Bonen EUR34.9 million -- Rosersberg I EUR3.9 million -- Rosersberg II EUR22.7 million -- Settimo EUR13.5 million
These costs are not provided for in the Statement of Financial Position. Capital commitments represent costs to bring the asset to completion under the developer's funding agreements which include the developer's margin.
Valuation risk
There is risk to the fair value of real estate assets that are part of the portfolio of the Group, comprising variation in the yields that the market attributes to the real estate investments and the market income that may be earned.
Real estate investments can be impacted adversely by external factors such as the general economic climate, supply and demand dynamics in the market, climates risks, competition, and increase in operating costs.
Besides asset specific characteristics, general market circumstances affect the value and income from investment properties such as the cost of regulatory requirements related to investment properties, interest rate levels and the availability of financing.
The Manager of the Group has implemented a portfolio strategy with the aim to mitigate the above stated real estate risk. By diversifying in regions, risk categories and customers, it is expected to lower the risk profile of the portfolio.
As of the date of this Annual Report, the only investments of the Group that have been identified consist of the current portfolio as specified in the Management Report. While the Group is negotiating to acquire further properties, there is no guarantee that these properties will form part of the portfolio of the Group.
With respect to new investments, management will be targeting specific investment categories based on the Group's investment objective and restrictions. Because such investments may be made over a substantial period of time, the Group faces the risk of interest rate fluctuations in case of leveraging these investments and adverse changes in the real estate markets.
Fair value hierarchy
The Group considers that all of its investment properties and investment properties under construction fall within Level 3 of the fair value hierarchy as defined by IFRS 13. There have been no transfers between Level 1 and Level 2 during any of the periods, nor have there been any transfers between Level 2 and Level 3 during any of the periods.
The valuations have been prepared on the basis of Market Value ("MV"), which is defined in the RICS Valuation Standards, as:
"The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."
MV as defined in the RICS Valuation Standards is the equivalent of fair value under IFRS.
The descriptions and definitions relating to valuation techniques and key unobservable inputs made in determining fair values are as follows:
Valuation techniques
Investment properties completed: income approach
The income method (or income approach) quantifies the net present value of future benefits associated with the ownership of the asset by totalling the current tenancy of the property, followed by the demand market rent on lease expiry, capitalised at an appropriate yield. The methodology is based on a direct capitalisation model where the lease-based income has been capitalised with an all-risk yield in perpetuity, except for the investment properties in Italy were valued by adopting an Income Approach with a Discounted Cash Flow Methodology (DCF) analysis. The choice of this methodology represents the likely basis of analysis to be used by a potential purchaser for this type of property (income producing).
Investment properties under construction: residual approach or equivalent
The residual approach or equivalent for properties under construction takes the expected valuation of the finished property using the income approach and deducts forecast costs to complete the development and an allowance for developer's profit.
Unobservable input: estimated rental value ("ERV")
ERV is dependent upon a number of variables in relation to the Group's property. These include: size, building specification and location. At 30 September 2022, the range was between EUR44 and EUR94 per square metre, per annum (2021: EUR41 and EUR88).
Unobservable input: yield
Yield is dependent on the customer, lease length and the other variables listed above for ERV. At 30 September 2022, the average yield for standing assets was 3.94% and the range was between 3.28% - 4.89% (2021: 3.33% - 7.00%). Implicit in the yield is the valuers consideration of climate risks.
Yield and ERV are not necessarily independent variables. It is possible a change in one assumption may result in an offsetting change to the other but equally the change in both assumptions may increase the impact on valuation.
Sensitivities of measurement of significant unobservable inputs
As set out within significant accounting estimates and judgements above, the Group's property portfolio valuation is open to estimation uncertainty and is inherently subjective by nature. At the balance sheet date, when the property portfolio was valued, the Group considered the range used below, in the sensitivity analysis, to be appropriate as at that date.
As a result the following sensitivity analysis has been prepared for investment properties:
-0.25% yield +0.25% yield -5% in ERV +5% in ERV
EURm EURm EURm EURm
-------------------------------------- ------------ ------------ ---------- ----------
Increase/(decrease) in the fair value
of investment properties as at 30
September 2022 115.14 (102.22) (45.74) 48.97
-------------------------------------- ------------ ------------ ---------- ----------
Increase/(decrease) in the fair value
of investment properties as at 30
September 2021 82.16 (72.68) (27.57) 26.28
-------------------------------------- ------------ ------------ ---------- ----------
The JLL valuation includes deductions for transaction costs that would be incurred by a hypothetical purchaser at the valuation date. These costs include Real Estate Transfer Tax ("RETT") equivalent to stamp duty except for properties in Belgium, Italy and Sweden. In Italy, this is due to the structure of an Investment Management Company ("SGR").In Belgium and Sweden, the local valuation practice is to exclude such costs given the prevalence of corporate rather than asset transactions in these markets.
15. Trade and other receivables
30 September 30 September
2022 2021
Non-current trade and other receivables EURm EURm
---------------------------------------- ------------ ------------
Cash in public institutions 1.17 1.17
---------------------------------------- ------------ ------------
The cash in public institutions is a deposit of EUR1.17 million given by the customer for the property in Barcelona, Spain.
30 September 30 September
2022 2021
Current trade and other receivables EURm EURm
-------------------------------------------------- ------------ ------------
Trade receivables 1.34 1.45
Prepayments, accrued income and other receivables 18.61 12.28
VAT receivable* 11.48 3.51
-------------------------------------------------- ------------ ------------
31.43 17.24
-------------------------------------------------- ------------ ------------
* VAT receivable includes VAT on capital expenditure across the developments and a reclaim on the purchase of the property in Italy EUR1 million (30 September 2021: EUR2 million).
The following table sets out the ageing of trade receivables as at 30 September 2022:
30 September 30 September
2022 2021
Past due but not impaired EURm EURm
-------------------------- ------------ ------------
<30 days 0.92 1.16
30-60 days - -
60-90 days 0.02 -
90 days+ 0.40 0.29
-------------------------- ------------ ------------
Total 1.34 1.45
Past due and impaired - -
-------------------------- ------------ ------------
Total 1.34 1.45
-------------------------- ------------ ------------
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and ageing.
The expected loss rates are based on the Group's historical credit losses experienced over the period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers. Both the expected credit loss provision and the incurred loss provision in the current and prior period are immaterial.
No reasonably possible changes in the assumptions underpinning the expected credit loss provision would give rise to a material expected credit loss.
16. Cash and cash equivalents
30 September 30 September
2022 2021
EURm EURm
-------------------------- ------------ ------------
Cash and cash equivalents 90.18 329.73
-------------------------- ------------ ------------
All cash held under the Italian subsidiaries fund are subject to local dividend distribution rules which means that dividends can only be paid twice a year. The amount of cash held in Italy as at 30 September 2022 was EUR24.40 million (30 September 2021: EUR3.33 million). At the year end, the Group has two money market deposits, EUR2.0 million maturing on 25th October 2022 and EUR3.0 million maturing on 25th November 2022.
17. Trade and other payables
30 September 30 September
2022 2021
Non-current trade and other payables EURm EURm
------------------------------------- ------------ ------------
Other payables 1.29 1.40
------------------------------------- ------------ ------------
30 September 30 September
2022 2021
Current trade and other payables EURm EURm
--------------------------------- ------------ ------------
Trade and other payables 7.44 3.31
Bank loan interest payable 2.40 1.78
Deferred income 2.97 1.73
Accruals 25.99 14.39
VAT liability - 0.71
--------------------------------- ------------ ------------
38.80 21.92
--------------------------------- ------------ ------------
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
18. Loan notes and borrowings
This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Group's exposure to interest rate and foreign currency risk, see note 21.
30 September 30 September
2022 2021
EURm EURm
---------------------------------------------- ------------ ------------
Bank borrowings 9.11 -
Loan notes 691.96 492.17
---------------------------------------------- ------------ ------------
Non-current liabilities: loans and borrowings 701.07 492.17
---------------------------------------------- ------------ ------------
The Group has a long-term Revolving Credit Facility ("RCF") (see table below). The loan has a margin of 1.2% to 1.9% above the higher of zero or Euribor, depending on the drawn level and the prevailing LTV ratio. On 22 December 2021 EUR58.82 million of the Revolving Credit Facility (RCF) transferred from HSBC UK Bank to Banco Santander. On 4 January 2022 the termination date of this part of the facility was extended from October 2023 to October 2025.
Facility Maturity
EURm date
------------------ -------- ----------
19 October
Banco Santander 58.8 2025
19 October
BNP Paribas 58.8 2025
19 October
Bank of China 58.8 2025
19 October
Bank of America 58.9 2025
19 October
Banco de Sabadell 14.8 2025
------------------ -------- ----------
Total RCF 250.0
------------------ -------- ----------
On 1 December 2021 the Group had secured EUR200 million US private placement debt which is split into 3 tranches below:
EUR100 million with 7 year maturity and a coupon of 1.216%, EUR50 million with a 10 year maturity and a coupon of 1.449%, and EUR50 million with 12 year maturity and a coupon of 1.590%. The debt was drawn down on 15 January 2022.
As at 30 September 2022, 73.7% (2021: 67%) of the Group's debt facilities are fixed term with 26.3% floating term (2021: 33%). The weighted average term to maturity of the Group's debt as at the year-end is 4.5 years (30 September 2021: 4.4 years). The LTV across all drawn debt was 35% against a target of 45%.
The Group has been in compliance with all of the financial covenants of the Group's loans and borrowings facilities as applicable throughout the year covered by the financial statements.
Any associated fees in arranging the loan and borrowings that are unamortised as at the year end are offset against amounts drawn on the facilities as shown in the table below:
30 September 30 September
2022 2021
Bank borrowings drawn EURm EURm
----------------------------------------------------------- ------------ ------------
Bank borrowings at the beginning of the year - 340.63
Bank borrowings drawn in the year 11.00 180.00
Bank borrowings repaid in the year - (524.00)
Loan issue costs paid (0.45) (0.63)
Non-cash amortisation of loan issue costs 0.55 2.01
Reclass unamortised loan issue costs to/(from) prepayments (1.99) 1.99
----------------------------------------------------------- ------------ ------------
Non-current liabilities: borrowings 9.11 -
----------------------------------------------------------- ------------ ------------
30 September 30 September
2022 2021
Loan notes EURm EURm
-------------------------------------- ------------ ------------
Green Bond 500.00 500.00
1.216% USPP 2029 100.00 -
1.449% USPP 2032 50.00 -
1.590% USPP 2034 50.00 -
Less: unamortised costs on loan notes (8.04) (7.83)
-------------------------------------- ------------ ------------
Non-current liabilities: loan notes 691.96 492.17
-------------------------------------- ------------ ------------
A summary of the drawn and undrawn loans and bank borrowings in the year is shown below:
30 September
2022
------------ ------- ----------
Total debt
Drawn Undrawn available
EURm EURm EURm
--------------------------------------- ------------ ------- ----------
Repayable between one and two years - - -
Repayable between two and three years - - -
Repayable between three and four years 511.00 239.00 750.00
Repayable between four and five years - - -
Repayable in over five years 200.00 - 200.00
--------------------------------------- ------------ ------- ----------
711.00 239.00 950.00
--------------------------------------- ------------ ------- ----------
30 September
2021
------------ ------- ----------
Total debt
Drawn Undrawn available
EURm EURm EURm
--------------------------------------- ------------ ------- ----------
Repayable between one and two years - - -
Repayable between two and three years - 58.82 58.82
Repayable between three and four years - - -
Repayable between four and five years 500.00 191.18 691.18
Repayable in over five years - - -
--------------------------------------- ------------ ------- ----------
500.00 250.00 750.00
--------------------------------------- ------------ ------- ----------
Set out below is a comparison by class of the carrying amounts and the fair value of the Group's financial instruments that are carried in the financial statements:
Book value Fair value Book value Fair value
30 September 30 September 30 September 30 September
2022 2022 2021 2021
EURm EURm EURm EURm
----------------------------------- ------------- ------------- ------------- -------------
Bank borrowings: RCF 11.00 11.00 - -
Loan notes: 0.95% Green Bonds 2026 500.00 422.55 500.00 506.60
1.216% USPP 2029 100.00 91.81 - -
1.449% USPP 2032 50.00 44.75 - -
1.590% USPP 2034 50.00 44.14 - -
----------------------------------- ------------- ------------- ------------- -------------
Loan notes and borrowings 711.00 614.25 500.00 506.60
----------------------------------- ------------- ------------- ------------- -------------
The fair value of financial liabilities traded on active liquid markets, including the 0.95% Green Bonds 2026, 1.216% USPP 2029, 1.449% USPP 2032 and 1.590% USPP 2034, are determined with reference to the quoted market prices. The financial liabilities are considered to be Level 1 and Level 2 fair value measure. The fair value of the financial liabilities at Level 1 was EUR422.55 million (30 September 2021: EUR506.6million) and Level 2 was EUR180.70 million (2021: EURnil).
19. Other liabilities
30 September 30 September
2022 2021
EURm EURm
-------------------------------------------------- ------------ ------------
Balance at the beginning of the year 25.19 8.89
Addition 8.38 11.98
Repayments (0.85) (0.61)
Fair value movements on measurement of put option 0.90 4.93
-------------------------------------------------- ------------ ------------
Balance at the end of the year 33.62 25.19
-------------------------------------------------- ------------ ------------
The Group's properties in Germany are held in subsidiaries in which the Group holds 94.9% or 89.9% of the shares in those subsidiaries. As part of the purchase agreements, the Group issued put options to the minority shareholders. The options are exercisable 10 years after acquisition and would require the Group to acquire all shares held by the minority shareholder at the then market value. Prior to the option date the Group has guaranteed a fixed dividend to the minority shareholder. If this is not met by the subsidiary, then the Company is required to settle this obligation.
The options are exercisable as follows:
Ownership Date of maturity
Companies % of option
---------------------------------------------------- --------- ----------------
Tritax EuroBox (Bochum) Propco GmbH 94.9 5 April 2029
Tritax EuroBox (Peine) Propco GmbH 94.9 28 March 2029
12 November
Dietz Logistik 33. Grundbesitz GmbH 89.9 2029
22 February
Tritax Eurobox (Bremen I) Propco GmbH 89.9 2030
22 February
Tritax Eurobox (Bremen II) Propco GmbH 89.9 2030
Tritax EuroBox (Gelsenkirchen) Propco GmbH (formerly 31 August
Dietz Logistik 26. Grundbesitz GmbH) 89.9 2031
6 November
Dietz Logistik 44. Grundbesitz GmbH 89.9 2031
13th December
Dietz 23 Grundbesitz GmbH 89.9 2031
24th April
Dietz FNL 5. Grundbesitz GmbH 89.9 2032
---------------------------------------------------- --------- ----------------
20. Derivative financial instruments
To mitigate the interest rate risk that arises as a result of entering into variable rate loans, a number of interest rate caps have been taken out in respect of the Group's variable rate debt to cap the rate to which three-month Euribor can rise. Each cap runs coterminous to the initial term of the respective loans. The caps expire in October 2023.
During the year the Group disposed of EUR50 million interest rate cap realising a loss of EUR0.11 million, in order to match the quantum of the available RCF. At the current period end, the Group had notional value of interest rate caps of EUR250 million (2021: EUR300 million to act as a hedge against the EUR250 million Revolving Credit Facility (see note 18).
The weighted average capped rate, excluding any margin payable, for the Group as at the year-end was 0.65% (30 September 2021: 0.67%). There was no premium payable towards securing the interest rate caps both in the year and at 30 September 2021.
30 September 30 September
2022 2021
EURm EURm
------------------------------------------------------ ------------ ------------
Interest rate derivatives valuation brought forward 0.05 0.09
Realised loss on derivative (0.11) -
Disposal of interest rate cap/Cap break receipt (0.17) -
Fair value movement 4.66 (0.04)
------------------------------------------------------ ------------ ------------
Non-current assets: interest rate derivatives carried
forward 4.43 0.05
------------------------------------------------------ ------------ ------------
The interest rate derivatives are marked to market based on the valuation by the relevant counterparty banks on a quarterly basis in accordance with IFRS 9. Any movement in the mark to market values of the derivatives are taken to the Group profit or loss.
As at the year end date the total proportion of debt hedged via interest rate derivatives equated to 100% (30 September 2021: 100%).
Fair value hierarchy
The fair value of the Group's interest rate derivatives is recorded in the Group Statement of Financial Position and is determined by forming an expectation that interest rates will exceed strike rates and discounting these future cash flows at the prevailing market rates as at the year end. This valuation technique falls within Level 2 of the fair value hierarchy, as defined by IFRS 13. The valuation was provided by the counterparty to the derivatives. There have been no transfers between Level 1 and Level 2 during any of the periods, nor have there been any transfers between Level 2 and Level 3 during any of the periods.
21. Financial risk management
Financial instruments
The Group's principal financial assets and liabilities are those that arise directly from its operations: trade and other receivables, trade and other payables and cash held at bank. The Group's other principal financial assets and liabilities are bank borrowings and interest rate derivatives, the main purpose of which is to finance the acquisition and development of the Group's investment property portfolio and hedge against the risk of interest rates rising. The book value of the Group's financial instruments that are carried in the financial statements approximates their fair value at the end of the year.
Risk management
The Group is exposed to market risk (including interest rate risk), credit risk and liquidity risk. The Board of Directors oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk
Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market prices. The financial instruments held by the Group that are affected by market risk are principally the Group's cash balances and bank borrowings along with interest rate derivatives entered into to mitigate interest rate risk.
The Group monitors its interest rate exposure on a regular basis. A sensitivity analysis was performed to ascertain the impact on the Group Cash Flow Statement and net assets based on nominal borrowings at the year-end. The RCF facility was drawn by EUR11 million at the yearend, 4.4% of the total EUR250 million facility. A sensitivity analysis performed to ascertain the impact on the Group Cash Flow Statement and net assets which shows that a 50 basis point decrease or increase in interest rates would result in an increase of EURnil or a decrease of EUR0.06 million to the interest payable charge, based on the nominal borrowings at the year end. The RCF benefits from interest rate caps, capping the level of Euribor 3 months to a maximum of 0.65%. Given the small proportion of total available RCF facility drawn at the year end, and the hedging in place, any further movement in interest rates would have limited impact to net assets.
The Group currently operates in eight countries. The current distribution of total assets is as follows:
The
Total assets Belgium Germany Spain Italy Poland UK Netherlands Sweden Total
------------- ------- ------- ------ ------ ------ ------ ------------ ------ --------
30 September
2022 170.02 878.41 238.06 227.39 63.82 24.81 181.79 111.70 1,894.92
------------- ------- ------- ------ ------ ------ ------ ------------ ------ --------
30 September
2021 142.09 671.60 200.52 147.43 61.22 295.92 62.25 48.78 1,629.81
------------- ------- ------- ------ ------ ------ ------ ------------ ------ --------
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risks from both its leasing activities and financing activities, including deposits with banks and financial institutions. Credit risk is mitigated by customers being required to pay rentals in advance under their lease obligations. The credit quality of the customer is assessed based on an extensive credit rating scorecard at the time of entering into a lease agreement or acquiring a let property. The Group holds collateral by way of bank deposits totalling EUR1.17 million (see note 15), and in certain cases holds bank guarantee letters.
Outstanding trade receivables are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial asset less the collateral held.
Credit risk related to cash deposits
One of the credit risks of the Group arises with the banks and financial institutions. The Board of Directors believes that the credit risk on short term deposits and current account cash balances is limited because the counterparties are banks, which are committed lenders to the Group, with high credit ratings assigned by international credit rating agencies.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and, going forward, the finance charges, principal repayments on its borrowings and its commitments under forward funded development arrangements (see note 14). It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due, as the majority of the Group's assets are property investments and are therefore not readily realisable. The Group's objective is to ensure it has sufficient available funds for its operations and to fund its capital expenditure. This is achieved by continuous monitoring of forecast and actual cash flows by management ensuring it has appropriate levels of cash and available drawings to meet liabilities as they fall due.
The table below summarises the maturity profile of the Group's financial liabilities, on the amount drawn at the year end, based on contractual undiscounted payments, including interest charges:
Total Less More
Carrying cash than 3-12 Between Between than
amount flows 3 months months 1-2 years 2-5 years 5 years
EURm EURm EURm EURm EURm EURm EURm
-------------------------- -------- ------ --------- ------- ---------- ---------- --------
30 September 2022
Loans and borrowings 701.07 752.93 2.06 6.19 8.25 526.43 210.00
Trade and other payables* 35.83 35.83 34.54 - 1.29 - -
Non-current liabilities 33.62 33.62 - - - - 33.62
Customer deposit 2.05 2.05 - - 0.47 - 1.58
-------------------------- -------- ------ --------- ------- ---------- ---------- --------
772.57 824.43 36.60 6.19 10.01 526.43 245.20
-------------------------- -------- ------ --------- ------- ---------- ---------- --------
Total Less More
Carrying cash than 3-12 Between Between than
amount flows 3 months months 1-2 years 2-5 years 5 years
EURm EURm EURm EURm EURm EURm EURm
-------------------------- -------- ------ --------- ------- ---------- ---------- --------
30 September 2021
Loans and borrowings 492.17 527.46 1.45 4.35 5.80 515.86 -
Trade and other payables* 20.88 20.88 19.48 - 1.40 - -
Non-current liabilities 25.19 25.19 - - - - 25.19
Customer deposit 2.11 2.11 - - - - 2.11
-------------------------- -------- ------ --------- ------- ---------- ---------- --------
540.35 575.64 20.93 4.35 7.20 515.86 27.30
-------------------------- -------- ------ --------- ------- ---------- ---------- --------
* Excludes VAT and deferred income as these are not financial liabilities.
Foreign currency risk
Investment Cash and Total
property cash equivalents currency
exposure exposure exposure
As at 30 September 2022 EURm EURm EURm
------------------------ ---------- ----------------- ---------
Pound Sterling - 10.19 10.19
Zloty - 1.64 1.64
SEK 9.65 11.71 21.36
------------------------ ---------- ----------------- ---------
Total foreign currency 9.65 23.54 33.19
------------------------ ---------- ----------------- ---------
+10% movement +5% movement -5% movement -10% movement
Foreign currency sensitivity EURm EURm EURm EURm
----------------------------- ------------- ------------ ------------ -------------
Pound Sterling 1.13 0.54 (0.49) (0.93)
Zloty 0.18 0.09 (0.08) (0.15)
SEK 2.37 1.12 (1.02) (1.94)
----------------------------- ------------- ------------ ------------ -------------
The Group's functional currency is the Euro as the Group operates in continental Europe. The Group keeps some cash in foreign currency to finance its working capital.
As at 30 September 2022 the Group has a cash balance of GBP 8.94million and PLN 7.97 million, equivalent to EUR10.18 million and EUR1.64 million respectively (30 September 2021: GBP 57.49 million and PLN 5.86 million, equivalent to EUR66.90 million and EUR1.27 million respectively). The Group also has a cash balance of SEK 127.44 million, equivalent to EUR11.72million as at 30 September 2022 (30 September 2021: SEK 11.94 million, equivalent to EUR1.18 million).
The Group holds investment properties in Sweden, which transact business denominated in SEK. As such, there is currency exposure resulting from translating their performance and net assets into the functional currency, Euros, for each financial period and at each balance sheet date.
Development risk
Development risk is the exposure that the Group takes in projects where building is not yet completed. Construction risk is mitigated by the Group by entering into fixed price contracts with the developers. Letting risk is usually alleviated by entering into pre-let agreements with customers or rental guarantees with the developers or vendors.
Taxation risk
Tax laws in these countries may change in the future, representing an increase in tax risk to the Company.
22. Capital management
The primary objective of the Group's capital management is to ensure that it remains a going concern.
The Board, with the assistance of the Investment Manager, monitors and reviews the Group's capital so as to promote the long term success of the business, facilitate expansion and maintain sustainable returns for Shareholders. The Group considers proceeds from share issuances, bank borrowings and retained earnings as capital. The Group's policy on borrowings is as set out below:
The level of borrowing will be on a prudent basis for the asset class, and will seek to achieve a low cost of funds.
The Directors intend that the Group will maintain a conservative level of aggregate borrowings with a medium term target of 45% of the Group's gross assets (with a limit of 50%).
The Group has complied with all covenants on its borrowings up to the date of this report. The targets mentioned above sit comfortably within the Group's covenant levels, which include LTV and interest cover ratio. The Group LTV at the year end was 35% (30 September 2021: 13%).
23. Customer deposit
30 September 30 September
2022 2021
Non-current liabilities EURm EURm
------------------------------------- ------------ ------------
Balance at the beginning of the year 2.11 1.31
Additions/(repayments) in the year (0.06) 0.80
------------------------------------- ------------ ------------
Balance at the end of the year 2.05 2.11
------------------------------------- ------------ ------------
The balance mainly relates to a cash deposit given by the customer for the property in Barcelona, Spain.
24. Share capital
The share capital relates to amounts subscribed for share capital at its nominal value:
30 September 30 September 30 September 30 September
2022 2022 2021 2021
Number EURm Number EURm
--------------------------------------- ------------ ------------ ------------ ------------
Issued and fully paid at 1 cent each
Balance at beginning of year - EUR0.01
Ordinary Shares 806,693,378 8.07 422,727,273 4.23
Shares issued in the year 110,606 0.00 383,966,105 3.84
--------------------------------------- ------------ ------------ ------------ ------------
Balance at end of year 806,803,984 8.07 806,693,378 8.07
--------------------------------------- ------------ ------------ ------------ ------------
The Group has one class of Ordinary Shares which carry no right to fixed income.
On 17 December 2021, the Group increased its share capital by 110,606 Ordinary Shares for 111.00 pence per Ordinary Share on behalf of certain members of staff of the Manager. As a result, the Group's issued share capital increased to 806,803,984 Ordinary Shares with voting rights.
25. Net asset value ("NAV") per share
Basic NAV per share is calculated by dividing net assets in the Group Statement of Financial Position attributable to ordinary equity holders of the Parent by the number of Ordinary Shares outstanding at the end of the year. As there are no dilutive instruments outstanding, basic NAV per share is shown below:
30 September 30 September
2022 2021
EURm EURm
----------------------------------------------------- ------------ ------------
Net assets per Group Statement of Financial Position 1,065.75 1,053.50
Ordinary Shares:
Issued share capital (number) 806,803,984 806,693,378
NAV per share (expressed in Euro per share)
Basic NAV per share 1.32 1.31
----------------------------------------------------- ------------ ------------
The Group has adopted EPRA NTA and EPRA NTA per share metrics as its primary EPRA NAV metric measure, alongside Basic IFRS NAV, for the year ended 30 September 2021 onwards. Please refer to the Notes to the EPRA and Other Key Performance Indicators section for details of all EPRA NAV metrics.
30 September 2022 30 September 2021
---------------------------- ----------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
EURm EURm EURm EURm EURm EURm
--------------------------- -------- -------- -------- -------- -------- --------
NAV attributable
to Shareholders 1,065.75 1,065.75 1,065.75 1,053.50 1,053.50 1,053.50
Mark-to-market adjustments
of derivatives (4.43) (4.43) - (0.05) (0.05) -
Deferred tax adjustment 49.63 49.63 - 33.06 33.06 -
Transaction costs1 83.78 - - 60.84 - -
--------------------------- -------- -------- -------- -------- -------- --------
NAV 1,194.73 1,110.95 1,065.75 1,147.35 1,086.51 1,053.50
--------------------------- -------- -------- -------- -------- -------- --------
NAV per share in
Euro 1.48 1.38 1.32 1.42 1.35 1.31
--------------------------- -------- -------- -------- -------- -------- --------
1 EPRA NTA and EPRA NDV reflect IFRS values which are net of transaction costs (RETT and purchaser's costs). Transaction costs are added back when calculating EPRA NRV.
26. Transactions with related parties
For the year ended 30 September 2022, all Directors and some of the Partners of the Manager are considered key management personnel. The terms and conditions of the Investment Management Agreement are described in the Management Engagement Committee Report. The fee payable to the Manager for the year ended 30 September 2022 was EUR7.88 million (2021: EUR5.46 million). An additional EUR0.19 million of the Investment Management fee was capitalised during the year (2021: EURnil).
The total amount outstanding at the year-end relating to the Investment Management Agreement was EUR1.99 million (2021: EUR1.51 million).
Details of amounts paid to Directors for their services can be found within the Directors' Remuneration Report.
The Members of the Manager that are considered as key management personnel are Nick Preston, James Dunlop, Henry Franklin, Petrina Austin and Phil Redding. Nick Preston was considered key management personnel until 21 September 2022.
During the year, the Directors received the following dividends: Robert Orr: EUR4,714 (2021: EUR1,220), Keith Mansfield: EUR14,500 (2021: EUR14,065), Taco De Groot: EUR2,100 (2021: EUR1,638), Eva-Lotta Sjostedt: EUR345 (2021: EUR308) and Sarah Whitney: EUR403 (2021: nil).
During the year, the Members of the Manager received the following dividends: James Dunlop: EUR16,348 (2021: EUR9,136), Henry Franklin: EUR10,144(2021: EUR6,184), Petrina Austin: EUR1,816 (2021: EUR1,462), Nick Preston: EUR7,585 (2021: EUR4,908) and Phil Redding: EUR681 (2021: EUR38).
On 17 December 2021 the Manager acquired in the market 50,000 Ordinary Shares at 110.60 pence per share and the Company issued to the Manager 110,606 new Ordinary Shares at a price of 111.00 pence per share on behalf of certain members of staff of the Manager.
On 17 May 2022 the Manager acquired in the market 213,043 Ordinary Shares at 98.30 pence per share on behalf of certain members of staff of the Manager.
27. Leases
As lessor
Details of the Group's leases from customers of its investment property are found in note 6.
As lessee
The Group holds one investment property, with a carrying amount of EUR141.10 million, on a lease which ends in 85.5 years. A peppercorn rent is paid and hence the associated lease liability and right-of-use asset are immaterial.
28. Subsequent events
On 6th October 2022, the Group announced that it is proposing to amend its Investment Management Agreement ("IMA") with Tritax Management LLP (the "Manager"). The proposal was passed by shareholders during a General Meeting on 25th October 2022.
The key change was a reduction in the base management fee to 1.00% on Net Asset Value ("NAV") up to EUR1 billion and 0.75% on NAV above EUR1 billion. This proposed fee has been back-dated, becoming effective from 1st August 2022. Based on the latest reported NAV, at 0th September 2022, the proposed changes would result in an estimate EUR2.1 million reduction to the annual cost to the Group.
There were no other significant events occurring after the reporting period, but before the financial statements were authorised for issue.
COMPANY BALANCE SHEET
Company registration number 11367705
At 30 September At 30 September
2022 2021
Note EURm EURm
--------------------------------- ---- --------------- ---------------
Non-current assets
Derivative financial instruments 4.43 0.05
Trade and other receivables 5 854.03 634.93
Investment in subsidiaries 4 671.37 458.21
--------------------------------- ---- --------------- ---------------
Total non-current assets 1,529.83 1,093.19
--------------------------------- ---- --------------- ---------------
Current assets
Trade and other receivables 5 8.86 13.55
Cash held at bank 6 16.47 291.56
--------------------------------- ---- --------------- ---------------
Total current assets 25.33 305.11
--------------------------------- ---- --------------- ---------------
Total assets 1,555.16 1,398.3
--------------------------------- ---- --------------- ---------------
Current liabil ities
Trade and other payables 7 (5.81) (6.18)
Income tax liability - -
--------------------------------- ---- --------------- ---------------
Total current liabilities (5.81) (6.18)
--------------------------------- ---- --------------- ---------------
Non-current liabilities
Loans and borrowings 8 (701.07) (492.17)
--------------------------------- ---- --------------- ---------------
Total non-current liabilities (701.07) (492.17)
--------------------------------- ---- --------------- ---------------
Total liabilities (706.88) (498.35)
--------------------------------- ---- --------------- ---------------
Total net assets 848.28 899.95
--------------------------------- ---- --------------- ---------------
Equity
Share capital 9 8.07 8.07
Share premium reserve 597.58 597.46
Retained earnings 242.63 294.42
--------------------------------- ---- --------------- ---------------
Total equity 848.28 899.95
--------------------------------- ---- --------------- ---------------
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own profit and loss account in the financial statements. The loss attributable to the Parent Company for the year ended 30 September 2022 amounted to EUR11.45 million (2021: profit EUR7.21 million).
The financial statements were approved by the Board of Directors on 5 December 2022 and signed on its behalf by:
Robert Orr
Director
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2022
Retained
Share capital Share premium earnings Total
Note EURm EURm EURm EURm
--------------------------------- ---- ------------- ------------- --------- -------
At 1 October 2021 8.07 597.46 294.42 899.95
--------------------------------- ---- ------------- ------------- --------- -------
Net profit/(loss) for the
year - - (11.45) (11.45)
--------------------------------- ---- ------------- ------------- --------- -------
Total comprehensive income - - (11.45) (11.45)
--------------------------------- ---- ------------- ------------- --------- -------
Contributions and distributions:
New Share capital subscribed* - 0.14 - 0.14
Associated share issue costs - (0.02) - (0.02)
Dividends paid 3 - - (40.34) (40.34)
--------------------------------- ---- ------------- ------------- --------- -------
At 30 September 2022 8.07 597.58 242.63 848.28
--------------------------------- ---- ------------- ------------- --------- -------
Retained
Share capital Share premium earnings Total
Note EURm EURm EURm EURm
--------------------------------- ---- ------------- ------------- --------- -------
At 1 October 2020 4.23 131.24 312.51 447.98
--------------------------------- ---- ------------- ------------- --------- -------
Net profit for the year - - 7.21 7.21
--------------------------------- ---- ------------- ------------- --------- -------
Total comprehensive income - - 7.21 7.21
--------------------------------- ---- ------------- ------------- --------- -------
Contributions and distributions:
New Share capital subscribed 3.84 476.14 - 479.98
Associated share issue costs - (9.92) - (9.92)
Dividends paid 3 - - (25.30) (25.30)
--------------------------------- ---- ------------- ------------- --------- -------
At 30 September 2021 8.07 597.46 294.42 899.95
--------------------------------- ---- ------------- ------------- --------- -------
* see note 24 of the Group accounts
NOTES TO THE COMPANY ACCOUNTS
1. Accounting policies
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101").
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted international accounting standards (UK-adopted IFRS), but makes amendments where necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken..
Disclosure exemptions adopted
In preparing the financial statements the Company has taken advantage of all applicable disclosure exemptions conferred by FRS 101. Therefore the financial statements do not include:
-- certain comparative information as otherwise required by UK adopted IFRS; -- certain disclosures regarding the Company's capital; -- a statement of cash flows and related notes; -- the effect of future accounting standards not yet adopted; -- the disclosure of the remuneration of key management personnel; and
-- disclosure of related party transactions with other wholly owned members of the Tritax Eurobox plc Group.
In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures are included in the Company's consolidated financial statements. The financial statements do not include certain disclosures in respect of:
-- financial instruments; and
-- fair value measurement other than certain disclosures required as a result of recording financial instruments at fair value.
Principal accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the periods presented, unless otherwise stated. No newly applicable accounting standards for the current year had any material impact on the Company.
Currency
The Company financial statements are presented in Euro which is also the Company's functional currency.
Dividends payable for Shareholders
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the Shareholders at an Annual General Meeting.
Financial assets and financial liabilities
Please refer to sections 4.4.1 and 4.4.2 of the Summary of significant accounting policies of the Group accounts.
Investment in subsidiaries
The investment in subsidiary companies is included in the Company's Balance Sheet at cost less provision for impairment. Provision for impairment is determined by comparing the carrying value of the subsidiary, at the reporting date, against the recoverable amounts. The recoverable amount is the greater of its value in use and its fair value less costs to sell. The fair value is driven by investment property which is measured using fair value hierarchy in accordance with IFRS 13. See note 14 of the Group financial statements for further details.
Significant accounting judgements, estimates and assumptions
The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. There were no significant accounting judgements, estimates or assumptions in preparing the financial statements.
2. Taxation
30 September 30 September
2022 2021
EURm EURm
---------------- ------------ ------------
UK corporate tax - -
---------------- ------------ ------------
The UK corporation tax charge of EURnil reflects the Company's intention to declare sufficient "qualifying interest distributions" to fully offset its "qualifying interest income" in the year.
The UK corporation tax rate for the financial year is 19%. Accordingly, this rate has been applied in the measurement of the Company's tax liability at 30 September 2022.
3. Dividends paid
Please refer to note 13 of the Group accounts.
4. Investment in subsidiaries
30 September 30 September
2022 2021
EURm EURm
------------------------------------------- ------------ ------------
At the beginning of the year 458.21 316.32
Increase in investments via share purchase 239.76 166.52
Disposals in the year - (23.43)
Impairment in the year* (26.60) (1.20)
------------------------------------------- ------------ ------------
At the end of the year 671.37 458.21
------------------------------------------- ------------ ------------
* *Impairments to investment in subsidiaries, in the current year, have resulted primarily from the reduction in the valuation of investment properties held, the primary driver of fair value in each subsidiary Investment property valuation is measured using the fair value hierachy, see note 14 of the Group financial statements for further detail.
The Company has the following subsidiary undertakings as at 30 September 2022:
Country of Ownership
Principal activity incorporation %
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Spain) Holdco,
S.L. Investment Holding Company Spain 100%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox Barcelona SLU Property Investment Spain 100%
--------------------------------- --------------------------- ---------------- ---------
Eurobox Italy Holdco Limited Investment Holding Company Jersey 100%*
--------------------------------- --------------------------- ---------------- ---------
Fondo Minerva Eurobox Italy** Property Investment Italy 100%
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Belgium) Holdco
NV Investment Holding Company Belgium 100%*
--------------------------------- --------------------------- ---------------- ---------
Panton Kortenberg Vastgoed
NV Property Investment Belgium 100%
--------------------------------- --------------------------- ---------------- ---------
Rumst Logistics NV Property Investment Belgium 100%
--------------------------------- --------------------------- ---------------- ---------
Rumst Logistics II NV Property Investment Belgium 100%
--------------------------------- --------------------------- ---------------- ---------
Rumst Logistics III NV Property Investment Belgium 100%
--------------------------------- --------------------------- ---------------- ---------
Pakobo NV Property Investment Belgium 100%
--------------------------------- --------------------------- ---------------- ---------
LCP Nivelles DC NV Property investment Belgium 100%
--------------------------------- --------------------------- ---------------- ---------
Tritax EuroBox (Wunstorf) Holdco
Limited*** Investment Holding Company United Kingdom 100%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Germany) Holdco
Limited (formerly known as
Tritax Eurobox (Netherlands)
Propco Limited) Investment Holding Company United Kingdom 100%*
--------------------------------- --------------------------- ---------------- ---------
Tritax EuroBox (Bochum) Propco
GmbH Property Investment Germany 94.9%*
--------------------------------- --------------------------- ---------------- ---------
Tritax EuroBox (Peine) Propco
GmbH Property Investment Germany 94.9%*
--------------------------------- --------------------------- ---------------- ---------
Dietz Logistik 33. Grundbesitz
GmbH Property Investment Germany 89.9%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Bremen I) Propco
GmbH Property Investment Germany 89.9%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Bremen II)
Propco GmbH Property Investment Germany 89.9%*
--------------------------------- --------------------------- ---------------- ---------
Dietz Logistik 26. Grundbesitz
GmbH Property Investment Germany 89.9%*
--------------------------------- --------------------------- ---------------- ---------
Dietz Logistik 44. Grundbesitz
GmbH Property Investment Germany 89.9%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Poland) Propco
sp. z.o.o. Property Investment Poland 100%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Strykow) Propco
sp. z o.o. Property Investment Poland 100%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Breda) PropCo
B.V. Property Investment The Netherlands 100%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Oberhausen)
Propco B.V. Property Investment The Netherlands 100%*
--------------------------------- --------------------------- ---------------- ---------
Tritax Eurobox (Gothenburg)
Propco AB Property Investment Sweden 100%*
--------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (Sweden) Holdco Limited (formerly known as Tritax Eurobox (Netherlands) Holdco Ltd) Investment Holding Company United Kingdom 100%* --------------------------------- --------------------------- ---------------- --------- Dietz 23 Grundbesitz GmbH Property Investment Germany 89.9%* --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (Gelsenkirchen) Propco GmbH Property Investment Germany 89.9%* --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (Hammersbach) FixCo GmbH Property Investment Germany 100%* --------------------------------- --------------------------- ---------------- --------- Dietz FNL 5 Grundbesitz GmbH Property Investment Germany 89.9%* --------------------------------- --------------------------- ---------------- --------- Tritax Eurobox (Roosendaal) PropCo B.V. Property Investment The Netherlands 100%* --------------------------------- --------------------------- ---------------- --------- Tritax Eurobox (Roosendaal) Solar B.V. Property Investment The Netherlands 100%* --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (Rosersberg I) AB Property Investment Sweden 100%* --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (Rosersberg 11:149) AB Property Investment Sweden 100%* --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (Rosersberg II) AB Property Investment Sweden 100%* --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (Malmo) Propco AB Property Investment Sweden 100% --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (Malmo) Holdco AB Property Investment Sweden 100% --------------------------------- --------------------------- ---------------- --------- Tritax Eurobox (France) Propco SCI Investment Holding Company France 100%* --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (France) Holdco Limited Investment Holding Company UK 100%* --------------------------------- --------------------------- ---------------- --------- Tritax EuroBox (France) Minco Limited Investment Holding Company UK 100%* --------------------------------- --------------------------- ---------------- --------- * These are direct subsidiaries of the Company.
** The day-to-day operations of Fondo Minerva Eurobox Italy are managed by Savills IM ("Savills") in accordance with the requirements of the Italian REIF regime. The Company has the power to replace Savills with another operator and therefore considers the investment to be a subsidiary under IFRS 10.
*** The subsidiary Tritax EuroBox (Wunstorf) Holdco Limited is exempt from Companies Act 2006 requirements relating to the audit of their individual accounts by virtue of Section 479A of the Act as this company has guaranteed these subsidiary companies under Section 479C of the Act.
The registered addresses for the subsidiaries across the Group are consistent based on their country of incorporation and are as follows:
Spain entities: Calle Maria Auxiliadora, 5, Local 10, 29602, Marbella, Málaga, Spain
Jersey entities: 26 New Street, St Helier, Jersey JE2 3RA
Italy entities: Savills Investment Management SGR S.p.A., Fondo Minerva, Via San Paolo 7, 20121 Milano, Italy
Belgium entities: Floor 7, Louizalaan 489, 1050 Brussels, Belgium
Germany entities: Darmstädter Straße 246, 64625 Bensheim, Germany and Eschersheimer Landstraße 14, 603 22 Frankfurt am Main, Germany
Poland entities: Warsaw, ul. Pi kna 18, 05-077 Warsaw, Poland
The Netherlands entities: Hoogoorddreef 15, 1101BA Amsterdam, the Netherlands
Sweden entities: c/o Scandinavian Trust AB, Birger Jarlsgatan 12, 114 34 Stockholm, Sweden
United Kingdom entities: 6 Duke Street St James's, London SW1Y 6BN, United Kingdom
France entities: 92, Avenue de Wagram 75017 Paris, France
5. Trade and other receivables
30 September 30 September
2022 2021
EURm EURm
---------------------------------------- ------------ ------------
Amounts receivable from Group companies 854.03 642.94
Other receivables 8.86 5.54
---------------------------------------- ------------ ------------
862.89 648.48
---------------------------------------- ------------ ------------
All amounts receivable from Group companies are documented under term loans with maturity exceeding three years, with an option to extend for a further five years. All borrowings are unsecured and are charged at 3% - 4%. Interest is generally payable quarterly and, therefore, is classified as current assets.
30 September 30 September
2022 2021
EURm EURm
------------------- ------------ ------------
Current assets 8.86 13.55
Non-current assets 854.03 634.93
------------------- ------------ ------------
862.89 648.48
------------------- ------------ ------------
6. Cash held at bank
30 September 30 September
2022 2021
EURm EURm
------------------ ------------ ------------
Cash held at bank 16.47 291.56
------------------ ------------ ------------
7. Trade and other payables
30 September 30 September
2022 2021
EURm EURm
------------------------- ------------ ------------
Trade and other payables 5.57 5.75
Accruals 0.24 0.43
------------------------- ------------ ------------
5.81 6.18
------------------------- ------------ ------------
8. Loan notes and borrowings
All external borrowings of the Group are held by the Company. Please refer to note 18 of the Group accounts for further details.
9. Share capital
Please refer to note 24 of the Group accounts.
10. Related party transactions
The Company has taken advantage of the exemption not to disclose transactions with other wholly owned members of the Group as the Company's own financial statements are presented together with its consolidated financial statements.
Below are the amounts received by the companies which are not wholly owned:
30 September 30 September
2022 2021
Income received from Group companies EURm EURm
------------------------------------------- ------------ ------------
Tritax EuroBox (Bochum) Propco GmbH 0.98 0.98
Tritax EuroBox (Peine) Propco GmbH 2.59 2.64
Dietz Logistik 33. Grundbesitz GmbH 1.27 1.20
Tritax Eurobox (Bremen I) Propco GmbH 0.53 0.53
Tritax Eurobox (Bremen II) Propco GmbH 0.55 0.57
Dietz Logistik 26. Grundbesitz GmbH 2.96 1.48
Dietz Logistik 44. Grundbesitz GmbH 3.37 1.07
Dietz 23 Grundbesitz GmbH 0.75 -
Tritax EuroBox (Gelsenkirchen) Propco GmbH 0.45 -
Dietz FNL 5 Grundbesitz GmbH 0.32 -
------------------------------------------- ------------ ------------
13.77 8.47
------------------------------------------- ------------ ------------
Below are the amounts owed by the companies which are not wholly owned:
Less than More than
Amount owed from Group companies as at 30 September one year one year
2022 EURm EURm
------------------------------------------------------ --------- ---------
Tritax EuroBox (Bochum) Propco GmbH - 24.42
Tritax EuroBox (Peine) Propco GmbH - 64.74
Dietz Logistik 33. Grundbesitz GmbH - 35.10
Tritax Eurobox (Bremen I) Propco GmbH - 13.16
Tritax Eurobox (Bremen II) Propco GmbH - 13.86
Dietz Logistik 26. Grundbesitz GmbH - 91.53
Dietz Logistik 44. Grundbesitz GmbH - 84.30
Dietz 23 Grundbesitz GmbH - 41.84
Tritax EuroBox (Gelsenkirchen) Propco GmbH - 18.95
Dietz FNL 5 Grundbesitz GmbH - 28.42
------------------------------------------------------ --------- ---------
- 416.32
------------------------------------------------------ --------- ---------
Less than More than
Amount owed from Group companies as at 30 September one year one year
2021 EURm EURm
---------------------------------------------------- --------- ---------
Tritax EuroBox (Bochum) Propco GmbH 0.04 24.42
Tritax EuroBox (Peine) Propco GmbH - 64.74
Dietz Logistik 33. Grundbesitz GmbH - 29.10
Tritax Eurobox (Bremen I) Propco GmbH - 13.16
Tritax Eurobox (Bremen II) Propco GmbH - 13.86
Dietz Logistik 26. Grundbesitz GmbH - 91.53
Dietz Logistik 44. Grundbesitz GmbH - 84.30
---------------------------------------------------- --------- ---------
0.04 321.11
---------------------------------------------------- --------- ---------
For all other related party transactions please refer to note 26 of the Group accounts.
11. Directors' remuneration
Please refer to note 9 of the Group accounts.
12. Subsequent events
Please refer to note 28 of the Group accounts.
NOTES TO THE EPRA AND OTHER KEY PERFORMANCE INDICATORS (UNAUDITED)
1. EPRA Earnings Per Share
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
---------------------------------------------------------- ------------- -------------
Total comprehensive income (attributable to Shareholders) 58.77 104.83
Adjustments to remove:
Changes in fair value of investment properties (49.94) (106.46)
Deferred tax adjustment 16.68 23.62
Changes in fair value of interest rate derivatives (4.66) 0.05
Gain on disposal of investment property - (7.33)
---------------------------------------------------------- ------------- -------------
Profits to calculate EPRA Earnings Per Share 20.85 14.71
Weighted average number of Ordinary Shares 806,779,439 535,144,885
---------------------------------------------------------- ------------- -------------
EPRA Earnings Per Share - basic and diluted 2.58 cents 2.75 cents
---------------------------------------------------------- ------------- -------------
2. EPRA NAV measures
The Group has adopted EPRA NTA and EPRA NTA per share metrics as its primary EPRA NAV metric measure, alongside Basic IFRS NAV, for the year ended 30 September 2021 onwards. Please refer to the Notes to the EPRA and Other Key Performance Indicators section for details of all EPRA NAV metrics
30 September 30 September
2022 2021
------------ -------- -------- ------------ ---------- --------
EPRA NRV EPRA NTA EPRA NDV EPRA NAV EPRA NNNAV EPRA NDV
EURm EURm EURm EURm EURm EURm
--------------------------- ------------ -------- -------- ------------ ---------- --------
NAV attributable
to Shareholders 1,065.75 1,065.75 1,065.75 1,053.50 1,053.50 1,053.50
Mark-to-market adjustments
of derivatives (4.43) (4.43) - (0.05) (0.05) -
Deferred tax adjustment 49.63 49.63 - 33.06 33.06 -
Transaction costs1 83.78 - - 60.84 - -
--------------------------- ------------ -------- -------- ------------ ---------- --------
NAV 1,194.73 1,110.95 1,065.75 1,147.35 1,086.51 1,053.50
--------------------------- ------------ -------- -------- ------------ ---------- --------
NAV per share in
Euro 1.48 1.38 1.32 1.42 1.35 1.31
--------------------------- ------------ -------- -------- ------------ ---------- --------
1 EPRA NTA and EPRA NDV reflect IFRS values which are net of transaction costs (RETT and purchaser's costs). Transaction costs are added back when calculating EPRA NRV
3. EPRA Net Initial Yield ("NIY") and EPRA Topped Up NIY
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
------------------------------------------------------- ------------- -------------
Investment property 1,765.60 1,281.38
Less: development properties (214.89) (24.03)
Completed property portfolio 1,550.71 1,257.35
Allowance for estimated purchasers' costs 83.78 60.84
Gross up completed property portfolio valuation (B) 1,634.49 1,318.19
Annualised passing rental income 61.19 51.06
Property outgoings (2.15) (1.72)
Annualised net rents (A) 59.04 49.34
Notional rent expiration of rent free periods or other
lease incentives 0.94 0.56
Topped up annualised net rents (C) 59.98 49.90
------------------------------------------------------- ------------- -------------
EPRA Net Initial Yield (A/B) 3.61% 3.74%
------------------------------------------------------- ------------- -------------
EPRA Topped Up Net Initial Yield (C/B) 3.67% 3.79%
------------------------------------------------------- ------------- -------------
4. EPRA vacancy rate
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
----------------------------------------------------- ------------- -------------
Annualised estimated rental value of vacant premises 0.19 1.78
Portfolio estimated rental value1 69.46 53.40
----------------------------------------------------- ------------- -------------
EPRA vacancy rate 0.28% 3.33%
----------------------------------------------------- ------------- -------------
1 Excludes land held for development.
All vacant space is currently covered by rental guarantees.
5. EPRA Cost Ratio and Adjusted EPRA Cost Ratio
Year ended Year ended
30 September 30 September
2022 2021
EURm EURm
-------------------------------------------------------- ------------- -------------
Property operating costs 6.10 1.34
Administration expenses 18.18 12.22
Net service charge costs 0.35 0.38
Other operating income (0.70) (0.55)
Total costs including vacant property costs (A) 23.93 13.39
Vacant property costs (0.35) (0.38)
Total costs excluding vacant property costs (B) 23.58 13.01
Gross rental income - per IFRS (C) 57.89 43.89
-------------------------------------------------------- ------------- -------------
Total EPRA Cost Ratio (including vacant property costs)
(A/C) 41.34% 30.51%
-------------------------------------------------------- ------------- -------------
Total EPRA Cost Ratio (excluding vacant property costs)
(B/C) 40.73% 29.64%
-------------------------------------------------------- ------------- -------------
Gross rental income including rental guarantee (D) 66.63 47.07
--------------------------------------------------- ------ ------
Total Adjusted EPRA Cost Ratio* (including vacant
property costs) (A/D) 29.46% 28.45%
--------------------------------------------------- ------ ------
Total Adjusted EPRA Cost Ratio* (excluding vacant
property costs) (B/D) 28.94% 27.64% --------------------------------------------------- ------ ------
There were no overheads nor operating expenses capitalised in the year in line with IFRS (2021: EURnil).
* Adjusted for EUR4.3m lease surrender payment at Hammersbach - see note 12 of financial statements for further details
6. Capital expenditure
30 September 30 September
2022 2021
EURm EURm
----------------------------------------------------- ------------ ------------
Acquisition1 303.17 372.56
Development1 144.79 19.81
Investment properties1:
Incremental lettable space 6.32 1.10
Customer incentives2 4.31 3.01
Other material non-allocated types of expenditure3 6.93 (2.49)
----------------------------------------------------- ------------ ------------
Total 465.52 393.99
----------------------------------------------------- ------------ ------------
1 See note 12 on financial statements
2 Fixed rental uplift and customer lease incentives after adjusting for amortisation on rental uplift and customer lease incentives.
3 Licence fees and rental guarantees.
The Group has no interest in joint ventures.
7. Total Return
Year ended Year ended
30 September 30 September
2022 2021
cents cents
--------------------------------------------- ------------- -------------
Opening EPRA NTA 134.69 122.14
Closing EPRA NTA 137.70 134.69
Growth in EPRA NTA 3.01 12.55
Dividends paid 5.00 4.85
Total growth in EPRA NTA plus dividends paid 8.01 17.40
--------------------------------------------- ------------- -------------
Total Return 5.95% 14.25%
--------------------------------------------- ------------- -------------
8. Loan to value ratio LTV
Year ended Year ended
30 September 30 September
2022 2021
% %
------------------------------ ------------- -------------
Gross asset value (A) 1,765.60 1,281.38
Borrowings1 (B) 711.00 500.00
------------------------------ ------------- -------------
Cash and cash equivalents (C) 90.18 329.73
------------------------------ ------------- -------------
LTV (B-C)/A 35.16% 13.28%
------------------------------ ------------- -------------
1 Nominal value of borrowings
9. Dividend cover
Year ended Year ended
30 September 30 September
2022 2021
% %
------------------------------------------ ------------- -------------
Adjusted earnings (A) 34.21 24.65
Dividends paid for the financial year (B) 40.34 30.73
------------------------------------------ ------------- -------------
Dividend cover A/B 84.80% 80.21%
------------------------------------------ ------------- -------------
10. Interest cover
Year ended Year ended
30 September 30 September
2022 2021
EUR EUR
----------------------------------------------------- ------------- -------------
Net property income (A) 52.20 42.72
----------------------------------------------------- ------------- -------------
Interest payable on loans and bank borrowings (note
10) 6.76 5.24
----------------------------------------------------- ------------- -------------
Commitment fees payable on bank borrowings (note 10) 1.13 1.56
----------------------------------------------------- ------------- -------------
Finance costs (B) 7.89 6.80
----------------------------------------------------- ------------- -------------
Interest cover A/B 6.62 6.28
----------------------------------------------------- ------------- -------------
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END
FR FZMGZVVZGZZG
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December 06, 2022 02:00 ET (07:00 GMT)
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