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Yew Grove REIT PLC Preliminary Results

10/03/2020 7:00am

UK Regulatory (RNS & others)


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RNS Number : 5190F

Yew Grove REIT PLC

10 March 2020

10 March 2020

Yew Grove REIT plc

(the "Company" or "Yew Grove")

Preliminary results for the year ended 31 December 2019

Yew Grove REIT plc, the AIM and Euronext Growth listed regional Irish commercial property investor, today announces its preliminary unaudited results for the year ended 31 December 2019.

 
                                    31/12/2019   31/12/2018   Change from 
                                                               prior period 
 Portfolio valuation (EUR 
  million)                          115.79       77.92        +49% 
                                   -----------  -----------  -------------- 
 Contracted rent (EUR million)      8.91         6.30         +41% 
                                   -----------  -----------  -------------- 
 Reversionary rent (EUR million)    10.09        6.80         +48% 
                                   -----------  -----------  -------------- 
 Occupancy                          92.5%        97%          -5% 
                                   -----------  -----------  -------------- 
 WAULT to expiry (years)            8.1          7.4          +0.7 
                                   -----------  -----------  -------------- 
 WAULT to break (years)             4.6          4.9          -0.3 
                                   -----------  -----------  -------------- 
 
 Net rental income (EUR million)    9.42         2.56         +267% 
                                   -----------  -----------  -------------- 
 IFRS NAV (EUR million)             109.92       75.13        +46% 
                                   -----------  -----------  -------------- 
 Profit after Tax (EUR million)     5.06         2.33         +117% 
                                   -----------  -----------  -------------- 
 EPRA earnings (EUR million)        5.70         0.72         +687% 
                                   -----------  -----------  -------------- 
 IFRS NAV per share (EUR 
  cents)                            98.52        100.18       -1.7% 
                                   -----------  -----------  -------------- 
 EPRA NAV per share (EUR 
  cents)                            98.52        100.18       -1.7% 
                                   -----------  -----------  -------------- 
 Basic EPS (EUR cents)              6.24         4.08         +53% 
                                   -----------  -----------  -------------- 
 EPRA EPS (EUR cents)               7.03         1.23         +472% 
                                   -----------  -----------  -------------- 
 DPS (EUR million)                  5.58         0.72         +672% 
                                   -----------  -----------  -------------- 
 DPS per share (EUR cents)          6.75         0.96         +603% 
                                   -----------  -----------  -------------- 
 EPRA EPS paid as dividends         97.9%        99.8%        -2% 
                                   -----------  -----------  -------------- 
 

Financial highlights

 
      --        Net rental income increased 267% from prior period, EPRA 
                 earnings increased by 687%. Expenditure excluding financing 
                 remained below 2018 run rate. 
      --        Total dividends of 6.75c per share fully covered by EPRA 
                 earnings. 
      --        100 million share issuance programme opened, EUR35.8 million 
                 proceeds raised across two equity issuance tranches with 
                 strong support from new and existing holders. 
      --        EUR39.5 million deployed on new property purchases in 
                 the period, increasing portfolio value by 49%. Equity 
                 proceeds raised in the year were committed within two 
                 weeks of receipt by the Company. 
      --        EUR9.1 million debt facility increase. Modest period end 
                 LTV of 18%, EUR8.3 million of facilities undrawn at period 
                 end. 
      --        EPRA NAV was impacted by purchase and share issuance costs 
                 through period of significant portfolio growth, and as 
                 a result of commercial property stamp duty changes announced 
                 in H2 2019. Like for like property value increased by 
                 5.3%. 
 

Operational highlights

 
      --   Property portfolio grew from EUR77.9 million to EUR115.8 
            million. 
      --        Contracted rent grew by 41% and reversionary rent by 
                 48% enhancing current and future rental income 
      --   Occupancy remains strong at 92.5%, the Company continues 
            to focus on high credit quality tenants. Revenue exceeded 
            contracted rent due to lease surrender proceeds of EUR2 
            million. 
      --   WAULT to expiry extended to 8.1 years and WAULT to break 
            shortened to 4.6 years so the Company can take advantage 
            of earlier rent reviews and breaks on reversionary properties 
            to capture upside. 
      --        Exit 2019 with an acquisition pipeline of c. EUR120, 
                 with target assets in line with the Company's investment 
                 policy 
 

Post year end highlights

 
      --   Company's revolving debt facility increased by EUR20 
            million. 
      --        Purchase of six office buildings at Millennium Park for 
                 a total consideration of EUR27.4 million completed at 
                 a blended NIY of 5.8%. 
      --   Contracted rent rose to EUR10.6 million and portfolio 
            value to EUR141.1 million. 
 

Jonathan Laredo, Chief Executive Officer, commented:

"Since our IPO less than two years ago we have successfully built a strong portfolio of diversified and differentiated Irish commercial property offering attractive yields. In 2019 we continued to raise and deploy capital judiciously, using our early mover advantage to selectively acquire a mix of individual assets and portfolios that fit with our investment strategy. Our reversionary portfolio and asset management efforts will seek to capture further income and value from our existing portfolio while our target market continues to offer opportunities for us to further expand our footprint outside the Dublin CBD at below replacement cost. We have a strong pipeline of attractive acquisition opportunities and we continue to review further investments.

"The Company is considering its funding options for financing its pipeline of acquisition opportunities, which could include using its existing share issuance programme later this year, together with debt finance where appropriate.

"We remain confident in the fundamentals of our business and its continued success in 2020. The current negotiations about Irish government formation have created some political uncertainty which is expected to be resolved in the second quarter of the year. The Irish economy again performed strongly in 2019 and the outlook for 2020 looks positive. Despite this we acknowledge the seriousness of the Covid-19 outbreaks and will continue to monitor the situation closely."

Enquiries:

 
 Yew Grove REIT plc                           +353 1 485 3950 
 Jonathan Laredo, Chief Executive Officer 
                                             ---------------------------------- 
 Charles Peach, Chief Financial Officer 
                                             ---------------------------------- 
 Michael Gibbons, Chief Investment Officer 
                                             ---------------------------------- 
 
 Goodbody Stockbrokers UC                     +353 1 667 0400 
                                             ---------------------------------- 
 Joint Broker & Euronext Growth Advisor 
                                             ---------------------------------- 
 David Kearney, John Flynn, Edel O'Reilly, 
  Ronan Bransfield 
                                             ---------------------------------- 
 
 Liberum Capital Limited 
                                             ---------------------------------- 
 Joint Broker & Nomad                         +44 20 3100 2000 
                                             ---------------------------------- 
 Richard Crawley, Jamie Richards, Jonathan 
  Wilkes-Green 
                                             ---------------------------------- 
 
 IFC Advisory                                 +44 203 934 6630 
                                             ---------------------------------- 
 Financial PR                                 yewgrovereit@investor-focus.co.uk 
                                             ---------------------------------- 
 Tim Metcalfe, Graham Herring 
                                             ---------------------------------- 
 

Forward-looking Statements

Certain information contained in this announcement may constitute forward looking information. This information relates to future events or occurrences or the Company's future performance. All information other than information of historical fact is forward looking information. The use of any of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "predict" and "potential" and similar expressions are intended to identify forward looking information. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. No assurance can be given that this information will prove to be correct and such forward looking information included in this announcement should not be relied upon. Forward-looking information speaks only as of the date of this announcement. The forward-looking information included in this announcement is expressly qualified by this cautionary statement and is made as of the date of this announcement. The Company and its Group does not undertake any obligation to publicly update or revise any forward

looking information except as required by applicable securities laws.

Notes to editors

Yew Grove REIT plc, quoted on the London Stock Exchange's AIM market and on the Euronext Growth Market in Dublin, is an Irish commercial real estate company invested in a diversified portfolio of Irish commercial property. Yew Grove has a particular focus on well-tenanted commercial real estate assets comprising of office and industrial assets outside of Dublin's Central Business District.

Yew Grove's highly experienced team has a proven track record in commercial property investment and asset management in Ireland and internationally, and is focused on delivering results. Its investment approach is strategic, not speculative, principally on assets that are let, pre-let or to be let after refurbishment. Shareholders are provided with stable, long-term income from a diverse portfolio of commercial property comprising well-tenanted real estate in strategic centres let to Irish government entities and other state bodies, IDA Ireland supported and other FDI companies, and larger corporates.

Chair's Statement

Activity

2019 was another busy year for the Company. Having invested all of the equity capital raised at the Company's initial public offering in 2018, Yew Grove invested the proceeds of the debt facility raised from Allied Irish Banks, p.l.c. ("AIB") in the first half of the year in Waterford and Cork Airport Business Park and in the development of a car park in Athlone. In July we received approval from our shareholders for a 100 million share issuance programme. Just over 36.6 million shares have been issued under the programme and the proceeds invested in four buildings in Athlone and a portfolio of six buildings in Millennium Park in Naas soon after the year end.

The Company also began the process of selling the smaller non-core properties acquired from the Yew Tree Investment Fund on IPO. The first of those disposals realised a gain on book value and it is hoped that the remaining four properties will also sell well in the near future. Once again we reached the year end with the Company almost fully invested, the quality of tenant improved and the rent roll increased by over 41% year on year.

Our activity reflects the Company's continued commitment to building a portfolio of institutionally attractive commercial properties in Ireland, outside of Dublin's central business district ('CBD'). The addition of institutional quality buildings leased or attractive to predominantly government or foreign direct investment tenants is evidence of the Company's progress in generating a secure and growing rent roll, with reversionary potential to support a sustainable and growing dividend.

Not only did the Company expand its portfolio (almost doubling in size if one includes the Millennium portfolio on which we had exchanged contracts prior to year-end and completed post year-end) but a we began a number of asset management projects which should bear fruit in 2020 .

As flagged last year the Company declared its inaugural dividend in February 2019. A quarterly dividend was instituted, the final quarter's dividend being declared in 2020. The first three quarter's dividends totalled 5.71 cents per share and despite the dilution of the final quarter payment (because the 26.6 million shares issued in December qualified for the dividend and increased our shares in issue by over 31%) a dividend of 1.04 cents per share was declared, giving 6.75 cents per share for the year.

One of our key strategic focuses for 2020 is enacting our Environmental, Social and Governance ("ESG") policy and rolling out the strategy for achieving this through out the business. There is more on our plans in our Annual Report but I welcome this engagement as one of the key issues of our time and look forward to overseeing an active and productive year.

Board

During the year the Board devoted considerable time to the Company's post-flotation organisation, acquisitions and to our strategic plans for the development of the business. I would like to thank each member of the Board for their commitment during the year and I look forward to working with them for the benefit of the Company and its shareholders. The Board are responsible for creating and maintaining the Company's strong culture and collegiate values and ensuring these are understood and shared by all employees and with all of our business relationships.

Management and employees

On behalf of the Board, I would like to thank the management team and employees of the Company for their continued hard work and energy over the past year. It has been a busy and demanding year and continues to be as the Company grows in 2020. Our success will be driven by the dedication and commitment of this team.

On behalf of the Board I would like to thank our shareholders who have continued to support the growth of our business.

CEO's Statement

I am pleased to report the results for the Company for the year ended 31 December 2019.

As 2020 opened we completed the acquisition of a portfolio of six office buildings in the Millennium Park in Naas, Co. Kildare and are again close to fully invested. This purchase has taken our property portfolio from c.EUR116 million to c.EUR141 million in value with a rent roll of EUR10.6 million. The share issue in December 2019 took our issued shares to over EUR110 million, and I fully expect us to grow significantly again in 2020.

Having instituted a quarterly dividend strategy in 2019 I look forward to the regularity of that dividend becoming an important constituent in the total equity return for shareholders.

Results

Pre-tax profits for the year were EUR5.06 million after accounting for a gain on sale of a property of EUR0.12 million and a revaluation loss of EUR0.77 million. The gains and losses are analysed further in the valuation section below, however the existing portfolio grew in value and the majority of the loss reflects the EUR2.8 million acquisition costs on properties bought during 2019. 98% of our European Public Real Estate ("EPRA") earnings of EUR5.7 million were distributed by way of dividend.

As a result of the financial performance and the costs of raising additional equity during the year, the EPRA Net Asset Value ("NAV") per share fell to 98.52 cents at 31 December 2019 from 100.76 cents (excluding declared but unpaid dividend) at 30 June 2019 and 100.18 cents at 31 December 2018. The Company's growth costs, including equity issuance costs of EUR1.0 million and the costs of buying new properties of EUR2.8 million contributed to this NAV per share fall. Underlying like for like property values increased by 5.3% over the period. I am confident that as our asset management activities begin to bear fruit in 2020 and beyond, we will see the value reflected in increased rental income.

The Company was a prudent and active user of its revolving finance facility with AIB during 2019. As the portfolio grew in size we increased the facility, enabling the Company to execute transactions as and when appropriate.

The contracted rent roll at 31 December 2019 was EUR8.9 million and following the completion of the Millennium portfolio has increased to EUR10.6 million. The gross yield at fair value (the return that the Company earns from its contracted rent at current valuation) was 7.7% at year end and following the purchase of the Millennium portfolio will fall to 7.5% at Millennium Park's June 2019 valuation. The Millennium portfolio purchase improves the Company's reversionary rent roll which will underpin future distributions to shareholders. The reversionary rent roll (which is achieved through letting vacancy, rent reviews and other events which allow for the properties to be let at what our third party valuer considers current market rent) was EUR10.1 million at 31 December 2019 and has increased to EUR12.8 million following the Millennium acquisition. This represents a gross reversionary yield of 8.7% at the year end and 9.1% following the Millennium portfolio acquisition.

Dividends

As set out in last year's annual report the Company instituted a quarterly dividend strategy in 2019. The dividends for the first three quarters of the year (including the special dividend paid in June to distribute the income element of the Cork Airport lease surrender premium) totalled 5.71 cents per share. The dividend for the final quarter was announced in February 2020 and brought the annual dividend per share to 6.75 cents, fully covered by EPRA earnings. Because the number of shares in issue increased from 85 million to 111.6 million in late December 2019, the per share value of that final dividend was necessarily diluted and would otherwise have exceeded 7 cents per share. However, I am pleased that the Company managed to meet expectations and paid a significant dividend secured on good quality covenants even in a year of rapid growth. The Company will continue to reward shareholders by distributing as much of a dividend as is sustainable and I look forward to another good year in this regard.

Review of activity

In 2019 the Company bought six buildings, in Waterford, Cork and Athlone, and sold one in Heather Road in Dublin. Just before year end we exchanged on a further six buildings on the Millennium Park in Naas.

In February, the Company acquired a building on the Cork Airport Business Park for EUR7.5 million (plus costs). In May, the Company acquired an office building on the Waterford IDA Park for EUR4 million (plus costs). In June we negotiated a reverse premium for the Cork property in return for allowing the tenant, Clearstream, to break their lease and vacate the building in July 2019.

Also in July, following the approval of a 100 million share issuance programme at the Company's EGM, we issued 10 million shares under the programme and together with debt from the AIB facility acquired three buildings on the Athlone IDA Technology Park for a combined price of EUR13 million plus costs.

In November the Company sold the first of the five buildings we had targeted for sale. These buildings are smaller, non-institutional properties some of which have exposure to retail. The first sale (of the property in Heather Road, Dublin) achieved a price of over 13% above the June 2019 valuation.

In December following an issue of 26.6 million further shares, the Company acquired the Teleflex office building on the Athlone IDA Technology Park for EUR12 million plus costs and exchanged contracts for the purchase of six office buildings on the Millennium Park in Naas for a purchase price of EUR25.3 million. The Millennium Park acquisition was completed in February 2020. The various costs referred to above are detailed in note 14 to the accounts.

At the year end the Company had an undrawn facility with AIB of EUR8.3 million, allowing it some leeway to continue to pursue and close transactions.

A major focus for the property market generally and for the Company in particular was the growing focus on sustainability, particularly through its measurement by way of ESG criteria. As a small company only recently floated on the public markets Yew Grove is not yet able to join the Global Real Estate Sustainability Benchmark and had not at our last year end published a policy and strategy for sustainability. That has been rectified with our policy, strategy and initial targets all set out in the section on engagement in the Annual Report. Moreover, despite our size, we believe in engaging with local communities and our suppliers to further that strategy and our shared objectives and our activities in that regard are also set out in that engagement section. Finally, Yew Grove is an equal opportunity employer and as we grow, we continue to invest in our staff as well as our buildings and the communities in which we operate.

Post balance sheet events

On 23 January 2020 the Company appointed Liberum Capital Limited as joint corporate broker and Nominated Adviser, Goodbody Stockbrokers UC was appointed as Euronext Growth Adviser and continues as joint corporate broker.

On 31 January 2020 the Company increased its facility with AIB to EUR39 million by adding the buildings acquired in the second half of 2019 to the security package. Most of that increased facility was used to complete the purchase of a portfolio of properties at Millennium Park in Naas which completed on 6 February 2020. This acquisition of six buildings and a greenfield site on the Millennium Park estate for EUR25.3 million plus costs represented a yield of 5.8% after costs. The portfolio's six office properties have 140,000 sq. ft of lettable space and 773 car parking spaces. Five of the buildings are fully tenanted and one, a high quality HQ space, is vacant. The tenanted buildings have a weighted average unexpired lease term ("WAULT") of approximately 2.5 years with a lease to final maturity of approximately 5 years. The Millennium portfolio is under rented and together with vacant space will enable the Company to achieve a reversion in excess of 9%.

On 13 February 2020 the Company announced its interim dividend for Q4 2019. The dividend (1.04 cents per share) brought the full 2019 dividend to 6.75 cents per share.

On 3 March 2020 the Company further increased its facility with AIB by EUR10.1 million, providing the Company flexibility to acquire further properties.

The Company is considering its funding options for financing its pipeline of acquisition opportunities, which could include using its existing share issuance programme later this year, together with debt finance where appropriate.

Property Valuation

Lisney as the external valuer valued the Company's property portfolio at EUR115.79 million at 31 December 2019. There are three key aspects to this valuation. The like for like portfolio (in other words the properties owned throughout the year) grew in value by EUR4.1 million (+5.3%) after accounting for capital expenditure; the properties acquired in 2019 fell in value by EUR1.8 million (-4.8%) and the company incurred acquisition costs of EUR2.8 million.

The change from 6% to 7.5% in stamp duty on sales of commercial property announced in the November budget effectively reduced the valuations of all properties by 1.65% and this explains much of the fall in value of properties acquired in 2019. The balance of that value fall is a temporary one. Having bought a building on the Cork Airport Business Park in February 2019, we agreed a lease surrender with the tenant and received a premium for that surrender. The year-end valuation of the now vacant property is some EUR1.3 million below our purchase cost (and even after accounting for EUR1 million surrender premium that was received in lieu of dilapidations) which created a fair value loss. We are actively marketing the building and once re-let, the value of the building will rise substantially.

A closer look at our like for like portfolio shows the best performing parts of our portfolio were our industrial buildings, which showed like for like growth of over 15% for the year. The growth of our like for like office portfolio was more muted at 4%, but some of this can be explained by the difficulty in sourcing sufficient ERV data in some of our regional locations to demonstrate to valuers that they should rerate valuations. As transactions occur we are confident that they will feed through and we will see increases but it does mean that the office portfolio is, in our view, currently valued conservatively.

As at 31 December 2019, the portfolio had a contracted rent roll of EUR8.9 million, representing a gross yield at fair value of 7.7%. The rent roll at the reversionary yield (assuming the vacancy in the portfolio has been let and the balance of the portfolio is let at the valuer's estimated rental values) would be EUR10.1 million representing a gross reversionary yield of 8.7%.

The portfolio has an unexpired lease term of 4.6 years to break and 8.1 years to final maturity. In our target geographic market vacancy rates are falling (and in many cases are at multi year lows). Moreover, the vacancy rates on buildings of the sort we own are lower than the average. In general, take up is rising, and the net effect is that rent levels are rising. This can be seen in Cork and Limerick and is, in our view, beginning to happen in Galway, where new construction has begun. The Company is therefore happy with a shorter WAULT to break as it allows the Company to capture reversion more quickly in this cycle.

Finance

The AIB facility at 31 December 2019 stood at EUR29 million with EUR8.3 million undrawn. Total debt to equity gearing and loan to value ("LTV") at 31 December 2019 were 18.9% and 18.0% respectively, having been 8.3% and 8.0% as at 31 December 2018. Details of the drawings on the facility can be seen at note 20 to the financial statements.

In January 2020 the facility was increased by EUR9.9 million before the acquisition of the Millennium portfolio, the majority of the increased facility has been drawn to complete the purchase. Following the Millennium portfolio purchase the facility was further increased by EUR10.1m.

Irish Commercial Real Estate Market

2019 was a record year for Irish commercial real estate with total transactions of EUR7.2 billion reported by CBRE. Part of the reason for this volume of overall market activity was the increase in private rented sector ("PRS") activity, but notwithstanding that, office transactions remained the largest sub sector of the market. The Irish market is becoming increasingly international with 2019 seeing a large increase in Asian investors, principally Korean, alongside European and US institutions. The prevailing mood at the larger real estate advisory firms is that the macroeconomic back drop for Irish property remains good, with continuing low interest rates driving demand for real estate as an asset class and Ireland's continued economic strength and the relative cheapness of its property market versus those in mainland Europe creating a positive sentiment from institutional investors that outweighs short term concerns. The Irish story, despite the relatively small size of the market and the relatively small lot sizes of individual transactions, has become increasingly attractive as the resilience and performance of its economy continues to impress. While the moves by the Irish Government last year to introduce higher stamp duty and amend some aspects of the tax treatment of REITs are unwelcome, particularly in the context of regional investment and development, we are encouraged by continued strong levels of investment activity.

From the Company's perspective the most positive changes in the landscape arose from two different directions: in the office space growing demand from occupiers meant vacancy rates, especially vacancy rates in larger floorplate modern and Grade A offices, fell to multi year lows. This is unsurprising given that the economy is largely driven by foreign direct investment ("FDI") and increasingly that investment results in business and jobs outside Dublin. This demand has driven prime rental growth to the point at which new development has begun in the three biggest regional cities, Cork, Limerick and Galway. That shift has not gone unnoticed in the investment market and there has been increased interest in these markets from the international institutional community. It is only the beginnings of a shift in the market, but it provides a welcome change in temperature. As CBRE note the next stage of market development will need to see the local infrastructure for employees (apartments, better local transport links etc.) reflect the growth of occupier demand and developer supply. Outside of the regional cities new buildings are still only possible on a forward funded basis, but increasingly tenants require more space and more modern space. We see this as a major opportunity for the Company in the years ahead.

At the same time the maturation of the Dublin central business district ("CBD") market has led to a gradual expansion of the CBD into Dublin 1,3,7 and 8 and eastwards through Dublin 2 ("Core+"). The effect is that whilst rents in the traditional Dublin CBD have remained and are expected to remain relatively stable, there has been a marked shift in rents in what were traditionally seen as fringe or Core+ areas of the city. This is partly driven by the larger tech tenants looking for space in what have heretofore been fringe areas (and in particular Dublin 8 has seen the benefits of this growth), but also as the Government is priced out of the city centre or needs to improve the quality of its estate at prices it can meet, it too is looking outside of its traditional locations. The demand led shifts are driving a rapid rental growth in these areas and that is also slowly spilling over into the suburbs. The Company has c.42% of its portfolio in Core+ and suburban locations and this should help to increase ERVs in and provide a welcome tailwind to the value of those properties.

The industrial market continues to reflect an imbalanced supply and demand market for high quality, larger buildings. Rents in the Dublin catchment area are now above the level at which speculative development is justified and increasingly buildings are going up, not to fill a specific demand but speculatively. The same thing has also happened on a more limited scale in Cork and again the buildings have been occupied almost at completion. The demand has also fed through into older, larger buildings that can be easily repurposed for modern use with scope to rebuild at the end of their useful lives. The investment market continues to be thin as little trading activity is evidenced but because Irish investment properties trade at a discount to comparable mainland European properties they are still popular with institutional investors.

ESG

In the Irish real estate market sustainability is the watchword for 2020. ESG investing has caught the imagination of the institutional investment market and its application to the property world is inescapable. The introduction in Europe of the NZEB (Near Zero Energy Building) regulation in November cemented the importance of the topic for those businesses that had previously not considered their carbon footprint to be of prime importance in assessing environmental building quality. For the Company the point is especially important. Our tenant roster is fundamentally made up of governmental bodies and large corporates, the very tenants that are expected to comply with (and largely want to live by) the newer, more environmentally responsible standards. Our property portfolio is also, because of the lack of development in the regions and suburbs, comprised of older buildings which are not as energy efficient or as environmentally friendly as is now required for new buildings under law. To that end we have instituted an ESG policy and strategy that puts the improvement of our estate, the fair treatment and development of our employees and suppliers and a positive interaction with the communities in which we invest, at the centre of our business. We are a small, young company, but I expect this policy and strategy to develop and grow with us over the next few years and I look forward to reflecting on a positive change over the next 12 months and beyond.

Outlook

We remain confident in the fundamentals of our business and its continued success in 2020. The current negotiations about Irish government formation have created some political uncertainty which is expected to be resolved in the second quarter of the year. The Irish economy again performed strongly in 2019 and the outlook for 2020 looks positive. Despite this we acknowledge the seriousness of the Covid-19 outbreaks and will continue to monitor the situation closely.

I would like to join the Board in thanking our shareholders who have continued to support the growth of our business.

Financial Review

In the context of a rapidly growing company our results for the year were positive. Our issued shares grew by 49%, debt facility by 46% and property portfolio by 49%. Group net assets grew from EUR75.1 million to EUR109.9 million at year end, net rental income grew from EUR2.6 million to EUR9.4 million and administrative costs remained controlled at EUR3.0 million when compared with EUR1.8 million in 6.5 months of 2018. Our total expense ratio ("TER") fell from 4.3% in 2018 to 3.7% in the year.

Net Asset Value

The net assets of the Group increased by EUR34.8 million, a rise of 46% over the year. The Company raised equity capital of EUR35.8 million, and further debt capital of EUR9.1 million, which was deployed on a further EUR39.5 million of property assets. Valuation falls on the Group's portfolio over the period were EUR0.8 million, while its accretive strategy cost EUR2.8 million in property purchase costs (including an increase in commercial property stamp tax rates of 1.5% late in the period) and share issuance costs of EUR1.0 million. The vast majority of the net rental income was distributed to shareholders as property income distributions.

Income statement

Net rental income for the year was EUR9.4 million, with the contracted rent roll rising by EUR2.6 million. A comparison of contracted rent roll for properties owned on 31 December 2018 with 31 December 2019 shows an increase of 41%, while contracted rent roll on properties bought during the period fell by EUR0.6 million, the majority of which was due to the lease surrender on the Cork Airport Business Park asset. As mentioned in the property review section, there were lease events which increased the income from some of the Company's properties, and with our reversionary portfolio we expect further increases over the coming years.

Administrative expenses over the year were EUR3.0 million. Excluding performance-based remuneration these were EUR2.4 million, comparing favourably with EUR1.8 million for the 6.5 months from Admission to 31 December 2018 while the Company's shares in issue increased by 49%. One additional hire was made in order to internalise the Company's finance function, which was previously provided by an external administrator. The internalisation was completed this year, and the Company will look at internalising other roles over the coming year if they offer control and cost benefits.

Dividends

Following last year's capital reduction and the filing of initial accounts in February, dividends for the year were 6.75c per share, an increase of seven times on the dividend declared for 2018 and fully covered by EPRA earnings, The Company has had a quarterly dividend schedule in place since March 2019 and continues to target distributing its net rental income to shareholders in this manner if prudent.

Investment properties

The property portfolio value was EUR115.8 million as at 31 December 2019, up from EUR77.9 million a year previously. Realised and unrealised losses on the property portfolio were -EUR0.6 million for the year, reflecting the costs of property purchases in an accretive period and the increase in stamp tax of 1.5% towards the end of the year as well as the gain on sale on one of our smaller properties. capital expenditure not recharged to tenants was EUR0.8 million. As at 31 December 2019 the portfolio had 23 properties, with an average value of EUR5.0 million. The smaller legacy properties that were a part of the IPO seed portfolio will be marketed over the coming year and the proceeds may be redeployed in more institutional properties with greater growth prospects.

Borrowings

Over the year the Company increased its revolving debt facility with AIB from EUR20 million to EUR29.1 million in July, and the drawn amount from EUR6.2 million to EUR20.8 million. As at 31 December 2019 the Company had undrawn facilities of EUR8.3 million. The Loan to Value ratio increased from 8% to 18% over the period and is expected to rise again as pipeline assets are purchased. The Company remained fully compliant with its facility covenants throughout the year.

Share capital

The Company received agreement from its shareholders in July for a one year, 100 million share issuance programme, which was accessed twice in the following five months. Initially EUR10 million was raised to purchase a portfolio of properties on an IDA Ireland industrial estate in July, and in December the Company raised a further EUR25.8 million which was committed to the purchase of a portfolio of office buildings within 2 weeks of receipt of funds. Shares in issuance increased from 75.0 million to 111.6 million, an increase of 49%.

Portfolio Report

Year End 2019 Portfolio at a glance;

Ø Contracted rent roll: EUR8.9m

Ø Portfolio Value: EUR115.8m

Ø Gross yield at fair value : 7.7%. Gross reversionary yield 8.7%.

Ø Number of buildings: 23*

Ø Income security with WAULT at 4.6 years to break and 8.1 years to expiry.

Ø Portfolio increase via acquisitions from EUR77.9m to EUR115.8m at 31(st) Dec 2019: a 49% increase.

Ø Contracts exchanged on a further EUR25.3m of property.

Ø Contracted rental roll has increased from EUR6.3m in 2018 to EUR8.9m in 2019: 41% increase.

Ø Portfolio Location: 42% of contracted rent roll generated by buildings within the Dublin catchment area.

Ø Portfolio Quality: 96% of contracted rent roll secured by Government, FDI and Large Enterprise tenants.

Ø Sectoral Exposure: 67% contracted rent roll generated from office, 26% from industrial and 7% from mixed use and retail buildings

* Letterkenny is treated as a single asset and tenant in the table below but has three leases over three co-located buildings.

 
       Building        Type      Location      Value     Contracted   Gross   Reversionary      Gross        WAULT     WAULT    Portfolio 
                                             (EUR'000)   rent roll    Yield    Rent Roll     Reversionary     to        to       vacancy 
                                                         (EUR'000)     at      (EUR'000)        Yield        lease     lease 
                                                                      Fair                                   break      end 
                                                                      Value                                 (years)   (years) 
                   ----------- 
 1    One Gateway   Office       Dublin         19,000        1,306   6.9%       1,491           7.8%         2.0       4.2       0.0% 
                                 North 
 2    Letterkenny   Office       West           15,755        1,437   9.1%       1,458           9.3%         8.3       8.3       0.0% 
      Three 
 3    Gateway       Office       Dublin         14,460          913   6.3%       1,188           8.2%         2.0       2.0       0.0% 
 4    Teleflex      Office       Midlands       11,610          948   8.2%        851            7.3%         8.8      11.7       0.0% 
      IDA Athlone 
 5    Block B       Industrial   Midlands        6,175          530   8.6%        530            8.6%         3.2      13.2       0.0% 
      Unit 2600, 
      Cork 
 6    Airport       Office       Cork            6,200            0   0.0%        633           10.2%         0.0       0.0      100.0% 
      Ashtown 
      Gate Block 
 7    C             Office       Dublin          5,140          391   7.6%        401            7.8%         4.2       5.9       0.0% 
      IDA Athlone 
 8    Unit B2       Industrial   Midlands        5,050          483   9.6%        483            9.6%         3.7      14.7       0.0% 
      Ashtown 
      Gate Block 
 9    B             Office       Dublin          4,915          393   8.0%        380            7.7%         3.0       9.5       0.0% 
      IDA 
      Waterford                  South 
 10   Block A       Office       East            4,100          353   8.6%        424           10.3%         4.2      15.0       0.0% 
      IDA Athlone 
 11   Block A       Industrial   Midlands        3,500          250   7.1%        312            8.9%         1.2      11.1       0.0% 
      IDA Athlone 
 12   Block C       Industrial   Midlands        3,150          280   8.9%        253            8.0%         4.8       9.8       0.0% 
      Blackwater 
 13   House         Office       Cork            2,750          233   8.5%        313           11.4%         1.4       4.5       29.7% 
      Airways 
 14   Unit 7        Industrial   Dublin          2,470          160   6.5%        248           10.0%         5.5      10.5       0.0% 
      Airways 
 15   Unit 8        Industrial   Dublin          2,740          150   5.5%        280           10.2%         6.1      11.1       0.0% 
      Bridge 
 16   Centre        Retail       Midlands        1,840          229   12.5%       181            9.8%         1.4       2.0       13.8% 
      Holly 
 17   Avenue        Industrial   Dublin          1,835          170   9.3%        187           10.2%         1.1       8.1       0.0% 
      Unit L2                    Dublin 
 18   Toughers      Industrial   Catchment       1,815          170   9.4%        201           11.1%         3.1       3.1       0.0% 
      Old Mill                   South 
 19   Lane          Mixed Use    West            1,500          302   20.1%       176           11.7%         6.9       8.7       0.0% 
 20   Canal House   Mixed Use    Midlands          930          107   11.5%        53            5.7%         7.0       7.0       0.0% 
      Centre 
 21   Point         Industrial   Dublin            855          110   12.9%        51            6.0%         6.7       6.7       0.0% 
                   -----------  ----------                                                                 --------  --------  ---------- 
                    Total                      115,790        8,915   7.7%       10,092          8.7%         4.6       8.1       7.4% 
     ------------               ----------                                                                 --------  --------  ---------- 
 

At year end, December 2019, the Company's property portfolio has 23 buildings spread throughout Ireland. Independently valued by Lisney, the capital value of this portfolio stands at EUR115.8m, reflecting a gross yield at fair value of 7.7% and gross reversionary yield of 8.7%.

Company Portfolio Objectives

Yew Grove's investment strategy is to pursue and invest in a diversified portfolio of industrial and office property assets in its target geographical area securing high quality income from quality tenant covenants.

The investment objectives of quality income from quality covenants are constrained by the following risk limits;

(i) No single property shall exceed 25% capital value of the total assets within the company;

(ii) Income receivable from one tenant group (except Government) not exceeding 35% of the total rental income;

(iii) At least 90% of the company's assets will be invested in the office and industrial sector. The REIT does not invest in solely residential, retail, or service sector buildings

(iv) No more than 20% of the total assets of the company may be invested in properties outside its geographic target market.

(v) The company will not engage in speculative development however will consider financing construction against pre-lets and/or agreements to lease to meet current tenants' expansionary plans.

Investment Activity 2019

The company closed four acquisitions in 2019 and exchanged conditional contracts on a fifth acquisition. In February 2020 these conditions were satisfied and it was completed as detailed in Note 30 to the financial statements.

Unit 2600, Cork Airport Business Park, Cork

In Q1, the Company acquired its first Cork property, Unit 2600 in the Cork Airport Business Park. The Park sits next to Cork Airport and is one of the prime sites in the Cork suburbs for FDIs and business services companies based in Cork. Built in 1999, the building has high grade office space for FDI tenants.

The building has c. 40,827 sq. ft of open plan space with 162 car parking spaces and was bought for EUR7.5 million which was a purchase yield to the Company of 7.85% after accounting for purchase costs . The tenant, Clearstream Global Securities Service Ltd had five years left to run on their lease. As part of its expansion plan, the tenant negotiated a lease surrender in June, resulting in a payment to the Company of EUR3m and the tenant vacated the building in July. The Company has completed a refurbishment on the building for a potential new tenant and is currently discussing terms with a number of interested parties.

Block A, IDA Waterford Business and Technology Park, Waterford

In Q1, the company completed the acquisition of Block A, IDA Waterford Business and Technology Park, Butlerstown, Waterford for EUR4.0 million. The modern office block has 36,845 sq. ft. of open plan space arranged over three storeys and completed to a high standard. The purchase yield to the Company was 8.56% after accounting for purchase costs. The building is tenanted by Tech Mahindra Business Services Ltd under a 20-year lease with a break in 5 years and SE2 Information Services Ireland Ltd under a five-year lease (with an exercised option to extend by a further five years).

Three properties in the IDA Business and Technology Park, Athlone

In July 2019, the company acquired a portfolio of three high quality industrial buildings in the IDA Business and Technology Park, Garrycastle, Athlone for a purchase price of EUR13.0 million, which represents a purchase yield to the company of 7.60% after accounting for purchase costs. The portfolio should enjoy a potential reversionary yield in excess of 8.0%.

The portfolio has 114,498 sq. ft. of modern high-tech space in three buildings with associated carparking and is leased to PPD Development Ireland Ltd, KCI Manufacturing and Signature Ortho Europe Ltd. The combined leases had a WAULT at time of purchase to break of 3.9 years and to lease expiry of 12.5 years. The combined current rent roll for the portfolio is EUR1.06 million.

The building occupied by KCI Manufacturing inter-connects with the company's existing Athlone property and brings the total size of the Company's property leased to KCI to 101,230 sq. ft. The addition of the three new buildings bring the Company's total industrial footprint in the park to c.161,370 sq. ft. with an aggregate rent roll of c.EUR1.54 million.

A further property on the IDA Business and Technology Park, Athlone

In December the Company completed the purchase of an office building also situated within the IDA Business and Technology Park, Garrycastle, Athlone. The purchase price was EUR12.0 million, which represented a purchase yield to the Company yield of 7.2% after purchase costs, the lease has rent reviews linked to CPI.

The building, constructed in 2016, has 45,144 sq. ft. of modern office space with a 245 space car park. It is leased to Teleflex Medical Europe Ltd and has a WAULT to break of 8.8 years and to lease expiry of 11. years. The current rent roll for the building is EUR0.95 million per annum.

This acquisition brings the company's total footprint in this IDA Ireland park to c.206,500 sq. ft. in five buildings with an aggregate annual rent roll of c.EUR2.49 million from four highly rated FDI tenants.

Portfolio of six buildings at Millennium Park, Naas

In late December 2019, the Company announced that it had exchanged conditional contracts for the purchase of a portfolio of six office buildings at Millennium Park, Naas, County Kildare. The purchase price for the portfolio was EUR25.3 million, which represents a purchase yield to the company of 5.8% after accounting for purchase costs. The conditions were satisfied and acquisition completed post year end in February 2020. The portfolio is expected to have near-term reversionary potential in excess of 9%.

The portfolio has 140,000 sq. ft. of modern offices over six buildings, as well as 773 carparking spaces and a six-acre greenfield site. Five of the office buildings are tenanted by FDI and large Irish enterprises, with one of the buildings being vacant. The combined leases have a WAULT to break of c.2.5 years and to lease expiry of c.5.0 years. The current annual rent roll for the portfolio is approximately EUR1.6 million.

The portfolio is a part of the Millennium Park, Naas development which is situated approximately 40 minutes' drive from Dublin City Centre and Dublin Airport. It is expected to benefit from a recent upgrade of the M7 motorway and significantly improved access from the new M7 interchange at Millennium Park.

Once the Millennium Park acquisition has completed, the Company's portfolio will have 27 properties with a proforma gross asset value of c. EUR141m and an annual contracted rent roll of EUR10.6m.

Portfolio Structure

The portfolio, which focuses on the industrial and office sector, has a tenant base providing stable income from higher yielding assets with strong tenant covenants.

The portfolio at 31 December 2019 has 707,100 sq. ft of total space. The office sector represents 51.1% of the portfolio floor space (361,491 sq. ft), of which approx. 35.4% (127,858 sq. ft) is within the Dublin catchment area.

The industrial sector represents 43.3% of the portfolio floor space (306,429 sq. ft) of which approx. 47.3% (145,060 sq. ft) is within the Dublin catchment area. The balance (161,370 sq. ft) is within the IDA Business & Technology Park, Athlone.

Mixed use (including retail space) represents 39,179 sq. ft or 5.5% of the floor space and these units are in mixed-use buildings where retail is ancillary to the anchor tenants which are government agencies occupying office space and also in the Tullamore Bridge Centre (anchored by An Post). All of these buildings will be marketed for sale during 2020.

Overall, the vacancy rate of the portfolio at 31 December 2019 currently stands at 7.14% or 50,118 sq. ft, the majority of which is at Unit 2600 at Cork Airport and Blackwater House.

Reversionary and Rental Potential

A key activity for the management team is the capture of potential reversionary rent and achieving rental growth in the portfolio, which will increase the Company's future revenues.

In 2019, the Company completed three new leases/licence and four rent reviews bringing an additional EUR376,000 to the annual rent roll. In addition, as tenants exercise their lease/licence extension options or pass on lease breaks, the WAULT of the portfolio has remained broadly in line with the previous year.

The portfolio tenants are high quality and include government bodies (such as Irish Water, ESB and the Office of Public Works) accounting for 27.6% of the total rent roll, while FDI and Corporates (such as KCI, Optum, Teleflex) account for 68.34%.

The external valuer's 31 December 2019 report shows that approximately 70% of the core portfolio by building has reversionary upside which could bring the yield on the portfolio to 8.72%.

Asset management of the company's portfolio is a key driver to increasing rental income, WAULT, and ultimately capital value of our properties. The highlights of 2019 include, the company achieving rental and licence increases of 33.0% on a lease at Ashtown Gate, 36.0% on a lease at Holly Avenue and 94.0% on a lease at Gateway One.

In addition, the company forward funded the development of a purpose-built surface carpark at an industrial unit located within the IDA Technology & Business Park, Athlone. This was leased to KCI Manufacturing in March 2019 at rent of EUR48,000 per annum for an additional 70 car parking spaces.

At the Gateway One property, a new lease to Mott McDonald completed the full occupancy of the property for the first time in 2019.

The portfolio has numerous ongoing projects that are to be completed within the year. Where the management team believe it will enhance future income generation and capital values, the Company may from time to time, undertake planning, intensification, unit consolidation, unit division, modernisations and redevelopments in respect of properties.

A complete review of all assets in the portfolio by way of a Building Investment Fund survey report began in 2019. The purpose is to ensure that existing sinking funds for each of the buildings are appropriately funded given the needs to replace and upgrade their mechanical and engineering systems. The Company plans to further develop this with a particular focus on enhancing the environmental and sustainability aspects of each building in line with the company's ESG policy.

Acquisitions & Disposals Policy

The Company's target geographic market is focused on a) the Dublin catchment area b) major regional cities and towns (especially those identified as hubs for industrial development under Project Ireland 2040) and c) in IDA Ireland Business and Technology Parks.

Outside Dublin, the Company has targeted and secured assets within the major regional cities and towns. It has specifically sought assets within IDA Ireland Business and Technology Parks on a national level, ranging from Letterkenny in the north to Waterford in the south. These parks are occupied by government and IDA Ireland backed tenants who are usually situated in a particular park for geographically specific reasons (such as the existence of an industrial supply chain in an industry sector, the quality and specificity of graduates from the local Institute of Technology or other educational and research establishments or the clustering effect from a number of companies in an industrial sector).

The investment focus of the management team is on assets with strong, stable and growing income. To that end, the Company looks for properties that are well situated and tenants with strong credit profiles. Ideally the buildings are in areas sought by similar tenants and should therefore provide a strong reversionary income as rents rise. Post-acquisition, the portfolio the Company seeks to develop close relationships with its tenants to facilitate better engagement with the tenants to understand their requirements, meet their needs and to improve visibility of potential opportunities but also alleviate or avoid potential problems. As an active landlord that is willing and able to facilitate a tenant's growth plans, the strategy has already borne fruit, and several have already confirmed that they are planning to expand their footprint within the Company's existing properties.

The Company's acquisition policy for 2020 will continue along the same path and focus on high quality buildings with secure, strong and growing income.

In 2020, the target acquisition lot size for industrial properties will be in a EUR5m and EUR15m range per property and for offices will be in a EUR10m and EUR30m range per property. The mixture of assets located within our target market remains strong. The Company's business model and relationships afford it the opportunity to explore a wider range of prospects and therefore diversification within the portfolio. The Company expects to see a robust pipeline of assets in 2020 coming from a number of different sources, including Investment firms, private equity firms and construction/development firms. The pipeline of assets coming forward in 2020 comes from asset and capital recycling, portfolio reconfiguration, market consolidation and broader more transparent pricing.

With the primary focus on strong but good quality and growing income returns, the Company anticipates generating capital growth as rents increase and through active asset management.

In order to maintain a higher quality and more balanced weighting of capital values within the portfolio, the management team intend to dispose of several of the smaller mixed use and retail assets during 2020.

The first of these disposals was Heather Road for EUR1.1m which represented a 15.1% annualised return to the company since IPO. Three other assets have been prepared for market, and one further asset is subject to a lease negotiation in preparation for sale.

Top Five Portfolio Assets

   1.   One Gateway, East Wall Road, Dublin 3 
 
 Investment         Non-CBD Dublin     Tenant                  Govt/FDI/Corp 
  Region 
 Asset              One Gateway        WAULT (expiry/break)    4.2/2.0 
                   ----------------   ----------------------  -------------- 
 Sector             Office              Acquisition Price      EUR16.31m 
                   -----------------   ---------------------  -------------- 
                    51,497 sq. ft 
 Area                GIA                Valuation              EUR19.00m 
                   -----------------   ---------------------  -------------- 
                                        Gross yield at 
 Age of Building    12 years             fair value            6.9% 
                   -----------------   ---------------------  -------------- 
                                        Gross Reversionary 
 Building Design    Multi-tenanted       Yield                 7.8% 
                   -----------------   ---------------------  -------------- 
 
 
   2.   IDA Letterkenny Office Park, Letterkenny, Co. Donegal 
 
 Investment Region    North- West          Tenant                  FDI 
 Asset                Optum 1, 2           WAULT (expiry/break)    8.3/8.3 
                       & 3 
                     ------------------   ----------------------  ---------- 
 Sector               Office                Acquisition Price      EUR16.00m 
                     -------------------   ---------------------  ---------- 
                      90, 548 sq. 
 Area                  ft GIA               Valuation              EUR15.76m 
                     -------------------   ---------------------  ---------- 
                                            Gross yield at 
 Age of Buildings     13-21 years            fair value            9.1% 
                     -------------------   ---------------------  ---------- 
                                            Gross Reversionary 
 Building Design      Single- tenanted       Yield                 9.3% 
                     -------------------   ---------------------  ---------- 
 
 
   3.   Three Gateway, East Wall Road, Dublin 3 
 
 Investment         Non-CBD Dublin     Tenant                  Government 
  Region 
 Asset              Three Gateway      WAULT (expiry/break)    2.0/2.0 
                   ----------------   ----------------------  ----------- 
 Sector             Office              Acquisition Price      EUR12.69m 
                   -----------------   ---------------------  ----------- 
                    43,212 sq. ft 
 Area                GIA                Valuation              EUR14.46m 
                   -----------------   ---------------------  ----------- 
                                        Gross yield at 
 Age of Building    12 years             fair value            6.3% 
                   -----------------   ---------------------  ----------- 
                                        Gross Reversionary 
 Building Design    Single Tenant        Yield                 8.2% 
                   -----------------   ---------------------  ----------- 
 
 
   4.   Teleflex, IDA Business & Technology Park, Athlone, Co. Westmeath 
 
 Investment Region    Midlands              Tenant                  FDI 
 Asset                Teleflex Building     WAULT (expiry/break)    11.7/8.8 
                     -------------------   ----------------------  ---------- 
 Sector               Office                 Acquisition Price      EUR12.00m 
                     --------------------   ---------------------  ---------- 
                      45,144 GIA sq. 
 Area                  ft                    Valuation              EUR11.61m 
                     --------------------   ---------------------  ---------- 
                                             Gross yield at 
 Age of Building      4 years                 fair value            8.2% 
                     --------------------   ---------------------  ---------- 
                                             Gross Reversionary 
 Building Design      Single Tenant           Yield                 7.3% 
                     --------------------   ---------------------  ---------- 
 
 
   5.         Block B, IDA Business & Technology Park, Athlone, Co. Westmeath 
 
 Investment         Midlands          Tenant                  FDI 
  Region 
 Asset              Block B           WAULT (expiry/break)    13.2/3.2 
                   ---------------   ----------------------  --------- 
 Sector             Industrial         Acquisition Price      EUR6.22m 
                   ----------------   ---------------------  --------- 
 Area               54,358sq. ft       Valuation              EUR6.18m 
                   ----------------   ---------------------  --------- 
                                       Gross yield at 
 Age of Building    11 years            fair value            8.6% 
                   ----------------   ---------------------  --------- 
                                       Gross Reversionary 
 Building Design    Single tenant       Yield                 8.6% 
                   ----------------   ---------------------  --------- 
 
 

Principal Risks and Uncertainties

The Company's Board has overall responsibility for the establishment and oversight of the Company's risk management framework to ensure that its strategy can be successfully implemented. The Audit Committee is responsible for developing and monitoring the Company's risk management policies, as set out in the governance statement. Risk management policies are established to identify and analyse the risks and emerging risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. All of these policies are regularly reviewed in order to reflect changes in the market conditions and the Company's activities.

The Company's risk register, reviewed by the Audit Committee, records key risks and emerging risks across the Company's current and future investment, operations, IT, governance, economic and strategic areas of activity. The register assesses the likelihood and impact of risks as well as their direction in order to monitor progress in managing and mitigating them. A register of errors and breaches is also maintained and no material breaches were noted during the financial period.

The Board

The Board has overall responsibility for maintaining and monitoring the Group's systems for risk management and internal control. The Board reviews and approves the risk appetite of the Company.

The Audit Committee

The Board has charged the Audit Committee with reviewing the adequacy and effectiveness of the Company's internal control (including financial control) and risk management systems. The Audit Committee assesses management's risk measurement and control.

Executive Management

Executive management have day to day responsibility for ensuring the Board's strategy with regards to risk management, measurement and reporting is implemented. In addition, they identify and provide assessment of current and future risks the Company may face for the Board's review.

Internal Audit

The Audit Committee considers the nature, scale, complexity and range of operations of the Company, including its external administrator structure for the first ten months of the period in relation to financial reporting.

During the period the company internalised the finance function that had previously been provided by the Administrator. As part of this process, the required internal controls and segregation of duties were put in place. In order to reduce the risks surrounding the transfer of the finance function to the internal finance team the company ran parallel accounting records with the Administrator for the months of August, September and October 2019. Reviews were completed during this period to ensure that the internal finance team have the capabilities to maintain the accounting records of the company, following which the Administrator resigned on 31 October 2019. The internal finance team have assumed the Administrator's role and now ensures that reporting to the Audit Committee and the Board is adequate, accurate, and timely.

The internal finance team maintains internal control processes, disaster recover processes and a business continuity programme which is reviewed on a regular basis. Based on the Committee's assessment of the foregoing controls within the Company, combined with the current size of the Company, the Audit Committee has recommended to the Board that it does not believe it is necessary to establish an internal audit function at this time. The Board concurs with the Audit Committee's recommendation not to establish an internal audit function for the Company at this time. The Audit Committee will continue to review this position annually and make appropriate recommendations to the Board.

The Company's assets are primarily office and industrial commercial properties in the Republic of Ireland. The principal risks it therefore faces are related to the Irish commercial property market in general, the Company's operating environment and individual properties and tenants. The Board has carried out a robust assessment of the principal risks and sets out below the principal risks and uncertainties that the Company is exposed to and that may impact performance in the coming financial year. The Company proactively identifies, assesses, monitors and manages these risks. Some risks are not yet known and some that are not currently deemed material may turn out to be material in the future. The material risks and uncertainties identified, along with their strategic impact on the business and mitigating factors, have been outlined.

 
     Identified       Impact on the Company/Property        Mitigating activities         Momentum 
        Risk                      market 
 Key Macro 
  economic risks 
--------------------------------------------------------------------------------------------------- 
 Brexit               Weakening Irish                  The key risk areas                Increasing 
                       economy puts pressure            by sector (agriculture, 
                       on rents and tenants,            food manufacture) 
                       in the event of                  are avoided in the 
                       a hard Brexit there              REIT portfolio. Tenants 
                       is the possibility               are assessed on the 
                       that the border                  volume of their sales 
                       between the Republic             to the UK or supplies 
                       of Ireland and Northern          from the UK at rental 
                       Ireland becomes                  or acquisition. Targeted 
                       a hard border                    properties are majority 
                                                        tenanted by stronger 
                                                        tenants. 
                     -------------------------------  --------------------------------  ----------- 
 Weakening            Weakening global                 The REIT assets are               Stable 
  economy              and/or national                  judged on the quality 
                       economy puts pressure            and local grounding 
                       on rents and tenants.            of tenants and prospective 
                       Fall in availability             tenants. Targeted 
                       of debt financing.               properties are majority 
                       Fewer buyers for                 tenanted by stronger 
                       the REIT's properties            tenants with demand 
                                                        and businesses not 
                                                        just dependant on 
                                                        the local economy. 
                                                        Tenant behaviour following 
                                                        the economic downturn 
                                                        after of 2007/8 is 
                                                        reviewed to indicate 
                                                        correlation with macroeconomic 
                                                        weakness 
                     -------------------------------  --------------------------------  ----------- 
 Weak Foreign         Risk of falling                  The Company's acquisition         Stable 
  Direct Investment    demand from Foreign              policy requires alternative 
  demand due           Direct Investment                use planning. The 
  to macro-economic    tenants                          Company monitors and 
  factors                                               aims to understand 
                                                        Foreign Direct Investment 
                                                        trends in advance. 
                     -------------------------------  --------------------------------  ----------- 
 Interest rate        Debt facility costs              The Company will seek             Stable 
  risk - rising        based on Euribor                 to mitigate the impact 
  rates                may increase with                of interest rate rises 
                       an adverse effect                on any future debt 
                       on dividend payments.            facility. The Company's 
                                                        finance manual includes 
                                                        mitigating policies 
                                                        for hedging interest 
                                                        rate risk. 
                     -------------------------------  --------------------------------  ----------- 
 
 
 Key Property 
  related risks 
------------------------------------------------------------------------------------------------- 
 Valuation                Property assets              The Company has a               Decreasing 
  of Company               outside the Dublin           separate Valuation 
  Assets                   Central Business             Committee to ensure 
                           District may lack            the most capable valuers 
                           recent comparable            are used. The Valuation 
                           transactions or              Committee can change 
                           benchmarks for an            the valuer and use 
                           external valuer              more than one valuer 
                           to use in valuation.         for the portfolio. 
                                                        The property team 
                                                        keep a record of comparables 
                                                        from acquisition to 
                                                        share with the valuer. 
                         ---------------------------  ------------------------------  ----------- 
 Property concentration   Aggregation of property      The Company's investment        Stable 
                           location, tenant,            committee reviews 
                           building use and             each asset individually 
                           tenant sectors may           and against the aggregated 
                           expose the Company           portfolio on purchase 
                           to increased risk            or later significant 
                                                        capital expenditure. 
                                                        The Company seeks 
                                                        to maintain a suitably 
                                                        diverse portfolio 
                                                        of properties and 
                                                        tenants, paying regard 
                                                        to the tenant's credit 
                                                        quality. Significant 
                                                        purchases, lease amendments 
                                                        or capital expenditure 
                                                        are matters reserved 
                                                        for the Board. 
                         ---------------------------  ------------------------------  ----------- 
 Tenant payment           Risk that the Company's      Tenants' covenant               Stable 
  behaviour                current or future            strength and prior 
                           tenants fail to              rental performance 
                           make payments due            is reviewed at purchase, 
                           in a full or timely          the property management 
                           manner, which could          group conduct regular 
                           affect the Company's         tenant meetings and 
                           dividends.                   tenant financial reviews. 
                         ---------------------------  ------------------------------  ----------- 
 Tightening               Risk the Company             The Company's owned             Stable 
  of rental                will not be able             assets would reflect 
  yields                   to invest capital            this tightening to 
                           at its expected              help achieve NAV price 
                           rental yields                targets. The Company's 
                                                        current portfolio 
                                                        is reversionary, which 
                                                        would be expected 
                                                        to support the company's 
                                                        rental income. The 
                                                        Company seeks to raise 
                                                        capital against identified 
                                                        assets to minimise 
                                                        the impact of lower 
                                                        rental yields on new 
                                                        investments. 
                         ---------------------------  ------------------------------  ----------- 
 Refurbishment            Failing contractors          The Company does not            Stable 
  - contractor             may delay or increase        expect to undertake 
  failure and              the cost of refurbishment    substantial refurbishment 
  cost                                                  and then only with 
                                                        Board approval. The 
                                                        Chief Investment Officer's 
                                                        team would require 
                                                        competing bids, pre-set 
                                                        timelines and budgets 
                                                        to identify failings 
                                                        and replace contractors 
                                                        earlier. 
                         ---------------------------  ------------------------------  ----------- 
 Ineffective              Risk that the Company's      The Property management         Stable 
  Asset Management         assets become less           group establish early, 
                           attractive to current        on-going relationships 
                           and target tenants.          with tenants to understand 
                                                        their accommodation 
                                                        needs. Each property 
                                                        has an asset management 
                                                        plan to ensure the 
                                                        tenant and Company 
                                                        work together in this 
                                                        regard. Asset management 
                                                        is reported weekly 
                                                        on all properties 
                                                        to the Executive Directors 
                         ---------------------------  ------------------------------  ----------- 
 
 
 Key Operational 
  Risks 
-------------------------------------------------------------------------------------------------- 
 Inability               Risk the Company              The Company has leverage         Stable 
  to raise further        will not be able              below the REIT ceiling. 
  debt or equity          to fund unexpected            The Company has and 
  capital                 major capital expenditure.    will remain in contact 
                          Risk the Company              with leverage providers 
                          will not be able              to ensure leverage 
                          to achieve its growth         is available at attractive 
                          strategy                      levels. The Investor 
                                                        relations policy has 
                                                        a calendar for capital 
                                                        raising ensuring the 
                                                        Company is regularly 
                                                        appraised of Investor 
                                                        interest and can target 
                                                        investors well in 
                                                        advance of the Company's 
                                                        immediate needs. The 
                                                        Company has raised 
                                                        equity capital twice 
                                                        in 2019, increasing 
                                                        the shares in issue 
                                                        by 49%, and debt capital 
                                                        once, increasing debt 
                                                        facility by 46% 
                        ----------------------------  -------------------------------  ----------- 
 Loss of key             Risk of Executive             The Company has Executive        Stable 
  staff                   management resignation,       management with significant 
                          illness or death              personal investment 
                                                        in the Company with 
                                                        lock-ups expiring 
                                                        in June 2020, and 
                                                        a specifically judged 
                                                        remuneration scheme 
                                                        and Long Term Incentive 
                                                        Plan to encourage 
                                                        retention. Executive 
                                                        management and other 
                                                        key staff have non-compete 
                                                        clauses. 
                        ----------------------------  -------------------------------  ----------- 
 Regulatory,             Risk of changing              The Company has a                Increasing 
  political,              operating environment         strong Board with 
  legislative,            hurting returns               a mix of capital markets, 
  tax, environmental      and amending strategy         property and audit 
  or planning                                           experience to better 
  changes                                               be aware of and react 
                                                        to these changes. 
                                                        The Executive management 
                                                        have experience of 
                                                        managing through legislative 
                                                        and tax changes and 
                                                        relationships with 
                                                        suitable professionals 
                                                        for Company advice. 
                        ----------------------------  -------------------------------  ----------- 
 Taxation planning       Emerging risk the             The Company has established      Stable 
                          Company may attract           a plan to ensure it 
                          a tax charge if               is listed on a recognised 
                          not listed on a               exchange in advance 
                          recognised exchange           of the required date. 
                          within 3 years of             Counterparties and 
                          IPO (May 2021)                advisers have been 
                                                        selected, draft timings 
                                                        and actions have been 
                                                        reviewed and agreed 
                                                        by the Board, who 
                                                        are updated by executive 
                                                        management. 
                        ----------------------------  -------------------------------  ----------- 
 Environmental           Emerging risk that            The Company has established      Increasing 
  change                  the Company's assets          a Sustainability Policy 
                          and operating or              and Sustainability 
                          economic model may            Committee to ensure 
                          be adversely affected         environmental risks 
                          by climate change             are identified and 
                                                        mitigated. The Company 
                                                        measures and manages 
                                                        its properties' environmental 
                                                        impact directly. 
                        ----------------------------  -------------------------------  ----------- 
 Corona virus            Emerging risk that            The Company's employees          Increasing 
  spread                  Covid-19 adversely            can be quickly isolated. 
                          affects the Company's         The Company's tenants 
                          tenants, employees            are monitored for 
                          and other stakeholders        impact of the disease 
                                                        by the property management 
                                                        group. 
                        ----------------------------  -------------------------------  ----------- 
 Business interruption   Risk one or more              The Company has a                Stable 
                          environmental or              robust business continuity 
                          other disturbances            plan. The Company's 
                          adversely affect              assets are geographically 
                          the Company's physical        dispersed and diversified 
                          operating environment         by tenant, type and 
                                                        use. All employees 
                                                        have the ability to 
                                                        work remotely. 
                        ----------------------------  -------------------------------  ----------- 
 

Consolidated Statement of Financial Position

 
 
 
 
                                                            2019                 2018 
   As at 31 December 2019                 Notes              EUR                  EUR 
 
 Non-current assets 
  Investment properties                  14          115,790,000           77,915,000 
  Computer equipment                      15               4,717                    - 
  Interest in joint venture               16               3,473                3,473 
                                                 ---------------       -------------- 
                                                     115,798,190           77,918,473 
 Current assets 
  Trade and other receivables             17           3,527,754              565,100 
 Cash and cash equivalents              18            14,577,461            4,823,734 
 
 Total current assets                                 18,105,215            5,388,834 
 
 Total assets                                        133,903,405           83,307,307 
 
 
 Current liabilities 
  Trade and other payables                19         (3,577,657)          (2,333,729) 
 Non-current liabilities 
  Borrowings                              20        (20,403,207)          (5,840,398) 
                                                 ---------------       -------------- 
 Total liabilities                                  (23,980,864)          (8,174,127) 
                                                 ---------------       -------------- 
 Net assets                                          109,922,541           75,133,180 
                                                 ===============       ============== 
 
   Equity 
 Share capital                          21             1,115,722              750,000 
 Share premium                          22            39,409,322            4,000,000 
 Other reserves                         22               125,222                    - 
 Retained earnings                      22            69,272,275           70,383,180 
                                                 ---------------       -------------- 
                                                        1 
 Total equity                                        109,922,541           75,133,180 
                                                 ===============       ============== 
 
 
   IFRS Net asset value per ordinary 
   share (cents)                          13               98.52               100.18 
 
   EPRA Net asset value per ordinary      13               98.52               100.18 
   share (cents) 
                                          13               98.41               100.18 
   Diluted IFRS asset value per 
   ordinary share (cents) 
 

Consolidated Statement of Comprehensive Income

For the financial year ended 31 December 2019

 
                                                           Year ended            5 April 2018 
                                                          31 December                      to 
                                                                 2019             31 December 
                                                                                         2018 
                                                                  EUR                     EUR 
                                                Notes 
 Total Rental and related income 
               Rental income                     3          9,946,724               2,764,695 
 Property expenses                               4          (527,948)               (204,351) 
                                                       --------------          -------------- 
 
   Net Rental and related income                            9,418,776               2,560,344 
 
    Fair value (loss)/gains on investment 
   properties                                    5          (768,283)               1,609,126 
    Realised gain on disposal of 
    Investment properties                         5           123,174                       - 
                                                       --------------          -------------- 
 
   Total income after revaluation 
   gains and losses                                         8,773,667               4,169,470 
 
 Expenditure 
 AIFM fees                                       6           (95,833)                (70,378) 
 Goodwill                                        7                  -               (180,011) 
 Finance costs                                   8          (669,384)                (15,412) 
 Administration expenses                         9        (2,949,241)             (1,568,725) 
                                                       --------------          -------------- 
 
   Total expenditure                                      (3,714,458)             (1,834,526) 
 
  Share of result from joint venture            16                  -                   3,473 
 
 
   Profit before taxation                                   5,059,209               2,338,417 
 
   Income tax                                    11                 -                 (4,538) 
 
 Profit for the financial period                 22         5,059,209               2,333,879 
                                                       --------------          -------------- 
 
   Total comprehensive income for 
   the financial period attributable 
   to the owners of the Group                               5,059,209               2,333,879 
                                                       ==============          ============== 
 
 
   Basic earnings per share (cent)               12              6.24                    4.08 
     Diluted earnings per share (cent)           12              6.23                    4.08 
 

Consolidated Statement of Changes in Equity

For the financial year ended to 31 December 2019

 
 
                                          Share capital                Share        Retained       Other         Total 
                             Notes              account              premium        earnings    Reserves        equity 
------------------- 
                                                    EUR                  EUR             EUR         EUR           EUR 
-------------------  -------------  -------------------  -------------------  --------------  ----------  ------------ 
 
 
 As at 1 January 
  2019                                          750,000            4,000,000      70,383,180           -    75,133,180 
 Total 
  comprehensive 
  income                                              -                    -       5,059,209           -     5,059,209 
 Ordinary share 
  capital 
  issued                        21              365,722           35,409,322               -           -    35,775,044 
 Share issue costs              22                    -                    -     (1,026,614)           -   (1,026,614) 
 Share based 
  payments 
  expense                       25                    -                    -               -     125,222       125,222 
 Equity Dividends 
  paid                          23                    -                    -     (5,143,500)           -   (5,143,500) 
                                    -------------------  -------------------  --------------  ----------  ------------ 
 As at 31 December 
  2019                                        1,115,722           39,409,322      69,272,275     125,222   109,922,541 
                                    ===================  ===================  ==============  ==========  ============ 
 

For the financial period from 5 April 2018 (date of incorporation) to 31 December 2018

 
 
                                          Share capital                Share        Retained       Other         Total 
                             Notes              account              premium        earnings    Reserves        equity 
------------------- 
                                                    EUR                  EUR             EUR         EUR           EUR 
-------------------  -------------  -------------------  -------------------  --------------  ----------  ------------ 
 
 
 Total 
 comprehensive 
 income 
 for the period:                                      -                    -       2,333,879           -     2,333,879 
 Transactions with 
  owners 
 recognised in 
 equity: 
 Issue of ordinary 
  share capital 
  Transfer to                   21              750,000           74,250,000               -           -    75,000,000 
  retained 
  earnings                      22                    -         (70,250,000)      70,250,000           -             - 
 Issue costs                    22                    -                    -     (2,200,699)           -   (2,200,699) 
                                    -------------------  -------------------  --------------  ----------  ------------ 
 As at 31 December 
  2018                                          750,000            4,000,000      70,383,180           -    75,133,180 
                                    ===================  ===================  ==============  ==========  ============ 
 

Consolidated Statement of Cash Flow

 
                                              Notes     Year ended        5 April 2018 
                                                       31 December                  to 
                                                              2019         31 December 
                                                                                  2018 
                                                     -------------       ------------- 
 
 Cash flows from operating activities 
 
 Profit before taxation                                  5,059,209           2,338,417 
 Adjustments for: 
 Depreciation                                                  858                   - 
  Fair value losses/(gains) on investment 
   properties                                   5        1,552,378         (1,609,126) 
  Gain on disposal of investment property        5       (123,174)                   - 
 Share of profit in joint venture              16                -             (3,473) 
 Finance costs                                  8          669,384              15,412 
 Goodwill                                       7                -             180,011 
 Increase in trade and other receivables               (2,962,651)           (147,502) 
 Decrease in trade and other payables                    1,069,370             974,402 
  Equity share based payments                   25         125,222                   - 
 Corporation Tax paid                                            -             (6,606) 
                                                     -------------       ------------- 
 Net cash inflow from operating activities               5,390,596           1,741,535 
 
 Cash flows from investing activities 
 Purchase of investment properties 
  and development expenses                     14     (39,546,096)        (50,395,874) 
  Development 
  Proceeds on disposal of investment 
   property                                     14       (831,283)                   - 
  Purchase of computer equipment                14       1,073,174                   - 
                                                15         (5,575)                   - 
                                                     -------------       ------------- 
 Net cash outflow from investing 
  activities                                          (39,309,780)        (50,395,874) 
 
 Cash flows from financing activities 
 Proceeds from the issue of ordinary 
  share capital                               21/22     35,775,044          75,000,000 
 Redemption of Class A shares in 
  Yew Tree Investment Fund(1)                                    -        (23,064,484) 
 Issue costs (3)                               22      (1,026,614)         (2,200,699) 
 Proceeds from loans and borrowings            20       14,591,200           6,199,540 
 Loan repayment (2)                            20        (523,219)         (8,329,422) 
  Equity dividends paid                         23     (5,143,500) 
 Net cash acquired from subsidiary 
  undertaking                                                    -           5,873,138 
                                                     -------------       ------------- 
 Net cash inflow from financing activities              43,672,911          53,478,073 
 
 Net increase in cash and cash equivalents               9,753,727           4,823,734 
  Cash and cash equivalents at beginning 
   of year                                               4,823,734                   - 
                                                     -------------       ------------- 
 Cash and cash equivalents at the 
  end of the period                            18       14,577,461           4,823,734 
                                                     =============       ============= 
 

For the financial year ended 31 December 2019

(1) On 8 June 2018 all of the Yew Tree Investment Fund (in Members Voluntary Liquidation) Class A shares were redeemed.

(2) On 8 June 2018 the Company subscribed to 8,329,422 EUR1 B ordinary shares for EUR8,329,422, the EUR8,329,422 proceeds were used to fully repay the Yew Tree Investment Fund's (in Members Voluntary Liquidation) outstanding loan subsequent to acquisition. The current year balance relates to repayment of company borrowings.

(3) Issue costs represent the Company's contribution to costs of issuing ordinary share capital for the financial period.

Company Statement of Financial Position

As at 31 December 2019

 
                                                            2019                 2018 
                                                             EUR                  EUR 
                                          Notes 
 Non-current assets 
  Investment properties                  14          115,790,000           77,915,000 
  Computer equipment                      15               4,717                    - 
                                                 ---------------       -------------- 
                                                     115,794,717           77,915,000 
 Current assets 
  Trade and other receivables             17           3,232,119              562,976 
 Cash and cash equivalents              18            14,086,632            4,364,045 
 
 Total current assets                                 17,318,751            4,927,021 
 
 Total assets                                        133,113,468            82,842021 
 
 
 Current liabilities 
  Trade and other payables                19         (3,044,870)          (2,099,951) 
 Non-current liabilities 
  Borrowings                              20        (20,403,207)          (5,840,398) 
                                                 ---------------       -------------- 
 Total liabilities                                  (23,448,077)          (7,940,349) 
                                                 ---------------       -------------- 
 Net assets                                          109,665,391           74,901,672 
                                                 ===============       ============== 
 
   Equity 
 Share capital                          21             1,115,722              750,000 
 Share premium                          22            39,409,322            4,000,000 
 Other reserves                         22               125,222                    - 
 Retained earnings                      22            69,015,125           70,151,672 
                                                 ---------------       -------------- 
 
 Total equity                                        109,665,391           74,901,672 
                                                 ===============       ============== 
 
 
   IFRS Net asset value per ordinary                       98.29               100.18 
   share (cents) 
 
   EPRA Net asset value per ordinary                       98.29               100.18 
   share (cents) 
 
   Diluted IFRS asset value per                            98.18               100.18 
   ordinary share (cents) 
 

The Company reported a profit of EUR5,033,567 (2018: EUR2,102,371) for the year ended 31 December 2019.

Company Statement of Changes in Equity

For the financial period to 31 December 2019

 
 
                                          Share capital                Share        Retained       Other         Total 
                             Notes              account              premium        earnings    reserves        equity 
------------------- 
                                                    EUR                  EUR             EUR         EUR           EUR 
-------------------  -------------  -------------------  -------------------  --------------  ----------  ------------ 
 
 
 As at 1 January 
  2019                                          750,000            4,000,000      70,151,672           -    74,901,672 
 Total 
  comprehensive 
  income                                              -                    -       5,033,567           -     5,033,567 
 Ordinary share 
  capital 
  issued                        22              365,722           35,409,322               -           -    35,775,044 
 Share issue costs              22                    -                    -     (1,026,614)           -   (1,026,614) 
 Share based 
  payments 
  expense                       25                    -                    -               -     125,222       125,222 
 Equity Dividends 
  paid                          23                    -                    -     (5,143,500)           -   (5,143,500) 
                                    -------------------  -------------------  --------------  ----------  ------------ 
 As at 31 December 
  2019                                        1,115,722           39,409,322      69,015,125     125,222   109,665,391 
                                    ===================  ===================  ==============  ==========  ============ 
 

Company Statement of Changes in Equity

For the financial period from 5 April 2018 (date of incorporation) to 31 December 2018

 
                                                   Share 
                                                 capital             Share          Retained       Other         Total 
                                 Notes           account           premium          earnings    reserves        equity 
----------------------- 
                                                     EUR               EUR               EUR         EUR           EUR 
-----------------------  -------------  ----------------  ----------------  ----------------  ----------  ------------ 
 
 Total comprehensive 
  income 
 for the period:                                       -                 -         2,102,371           -     2,102,371 
 Transactions with 
  owners 
 recognised in equity: 
 Issue of ordinary 
  share capital                     21           750,000        74,250,000                 -           -    75,000,000 
  Transfer to retained 
   earnings                         22                 -      (70,250,000)        70,250,000           -             - 
 Issue costs                        22                 -                 -       (2,200,699)           -   (2,200,699) 
                                        ----------------  ----------------  ----------------  ----------  ------------ 
 As at 31 December 
  2018                                           750,000         4,000,000        70,151,672           -    74,901,672 
                                        ================  ================  ================  ==========  ============ 
 
 
  Company Statement of Cash Flow 
   For the year ended 31 December 2019 
 
                                                    Year ended              5 April 2018 
                                                   31 December                        to 
                                                          2019               31 December 
                                                                                    2018 
                                         Notes             EUR                       EUR 
                                                --------------       ------------------- 
 
 Cash flows from operating activities 
 
 Profit before taxation                              5,033,567                 2,102,371 
 Adjustments for: 
 Depreciation                                              858 
  Fair value losses/(gains) on 
   investment properties                   5         1,552,378               (1,609,126) 
  Gain on disposal of investment 
   property                                 5        (123,174)                         - 
 Finance costs                             8           669,384                    15,412 
 Increase in trade and other 
  receivables                                      (2,703,643)                 (403,622) 
 Increase in trade and other 
  payables                                             770,364                 1,725,397 
  Equity share based payments              25          125,222                         - 
 Net cash inflow from operating 
  activities                                         5,324,956                 1,830,432 
 
 Cash flows from investing activities 
 Purchase of investment properties 
  and development expenses                14      (39,546,096)              (50,395,874) 
 Purchase of shares in subsidiary(1)                         -              (26,069,354) 
  Development                              14        (831,283)                         - 
  Proceeds on disposal of investment 
   property                                14        1,073,174                         - 
  Purchase of computer equipment           15          (5,575)                         - 
  Distribution from Yew Tree Fund          26           34,500                         - 
                                                --------------       ------------------- 
 Net cash outflow from investing 
  activities                                      (39,275,280)              (76,465,228) 
 
 Cash flows from financing activities 
 Proceeds from the issue of ordinary 
  share capital                           22        35,775,044                75,000,000 
 Issue costs(2)                           22       (1,026,614)               (2,200,699) 
 Proceeds from loans and borrowings       20        14,591,200                 6,199,540 
  Loan repayment                           20        (523,219)                         - 
  Equity dividends                         23      (5,143,500)                         - 
 Net cash inflow from financing 
  activities                                        43,672,911                78,998,841 
 
 Net increase in cash and cash 
  equivalents                                        9,722,587                 4,364,045 
  Cash and cash equivalents at 
   beginning of year                                 4,364,045                         - 
                                                --------------       ------------------- 
 Cash and cash equivalents at 
  the end of the period                   18        14,086,632                 4,364,045 
                                                ==============       =================== 
 
 

(1) In relation to the purchase of shares in subsidiary, on 8 June 2018 all of the Yew Tree Investment Fund (in Members Voluntary Liquidation) Class A shares were redeemed following the issue of Class B shares.

(2) Issue costs represent the Company's contribution to costs of issuing ordinary share capital for the financial period.

   1.   Accounting policies 

1.1 General information

Yew Grove REIT plc (the "Company", registered number 623896), together with entities controlled by the Company (its subsidiaries) (together the "Group"), is engaged in investing in a diversified portfolio of Irish commercial property with a view to maximising its shareholder returns.

The Company is a public limited company, incorporated and domiciled in Ireland. The registered address of the Company is 4th Floor, 76 Lower Baggot Street, Dublin 2.

The ordinary shares of the Company are listed on the Euronext Growth market (formerly the Enterprise Securities Market) of Euronext Dublin and the Alternative Investment Market of the London Stock Exchange.

1.2 Trading period

The Consolidated financial statements for the Group shown herein are for the financial year ended 31 December 2019 with comparatives from 5 April 2018 (date of incorporation) to 31 December 2018.

The results are inclusive of the parent company (Yew Grove REIT plc) and its subsidiary companies controlled by the Company.

1.3 Going concern

Based on financial projections which extend beyond twelve months from the date of the approval of these financial statements, the Directors consider that the Company and Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors have concluded that they should prepare the consolidated and company financial statements on a going concern basis.

1.4 Basis of preparation

The statements of the Group and Company for the financial year ended 31 December 2019 have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union ("EU") and the Companies Act 2014.

The financial statements of the Group and Company have been prepared on the historical cost basis, except for investment properties that are measured at fair value.

The financial statements of the Group and Company are presented in Euro, which is the functional currency.

Standards not affecting the reported results and financial position

IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these Consolidated financial statements:

 
 Amendments to References to the Conceptual Framework   1 January 
  in IFRS Standards                                      2020 
  IFRS 10 and IAS 28 Sale or Contribution of Assets 
  between an Investor and its Associate or Joint         1 January 
  Venture                                                2020 
 Amendments to IFRS 3 - Definition of a business        1 January 
                                                         2020 
  Amendments to IAS 1 and IAS 8 - Definition of          1 January 
   material                                               2020 
  IFRS 17 Insurance contracts                            1 January 
                                                          2021 
 

Management are of the view that the initial adoption of any of the above will not materially change the financial performance or the reported position of the Group or Company.

New standards effective for the current accounting period do not have a material impact on the consolidated financial statements of the Group and Company. These are discussed in further detail below.

Standards implemented for the first time on preparation of these financial statements

IFRS 16 Leases

In the current year, the Group and Company adopted IFRS 16 Leases for the first time. The date of initial application of IFRS 16 for the Group and Company was 1 January 2019. It introduces significant changes to lessee accounting by removing the distinction between operating and finance leases and requires the recognition of a right-of-use asset and a lease liability at commencement of all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The Group and Company is not party as a lessee to material property and equipment leases. The Group and Company does act as a lessor. Details of the Group's and Company's accounting policies under IFRS 16 are set out below.

Lease contracts - the Group and Company as lessor

The Group has acquired investment properties which are subject to commercial property leases with tenants. The Group has determined, based on an evaluation of the terms and conditions of these lease arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains substantially all of the risks and rewards incidental to ownership of these leased properties. Income from these leases is recognised on a straight line basis, recognition is from the date on which the company becomes a contractual party to the lease. A Lease is derecognised at the termination of the lease or when the company is no longer a contractual party to the lease.

Lease contracts - the Group as lessee

The Group assesses whether a contract is a lease or contains a lease at inception of the lease contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (less than EUR5,000 per annum). For these short-term leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability of leases other than short term leases is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

   --      fixed lease payments (including in substance fixed payments), less any lease incentives; 

-- variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

   --      the amount expected to be payable by the lessee under residual value guarantees; 

-- the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and

-- payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

The lease liability is presented as a separate line in the consolidated statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

-- the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

-- the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

-- a lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

The Group did not make any such adjustments during the year presented.

Right-of-use assets are amortised over the shorter period of lease term or useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The Group does not have any leases that include purchase options or transfer ownership of the underlying asset.

For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as peppercorn ground leases), the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is presented within Expenses in the consolidated statement of comprehensive income. As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient.

Approach to transition

The Group has applied IFRS 16 using the modified retrospective approach, without restatement of the comparative information.

Financial impact

The application of IFRS 16 to leases previously classified as operating leases under IAS 17 did not result in any changes for the recognition of right-of-use assets and lease liabilities. Leases are expensed to the Statement of Comprehensive Income on a straight-line basis.

1.5 Significant accounting judgements, estimates and assumptions

The preparation of the Group's Consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, 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 assets or liabilities affected in future periods.

In the process of applying the Company's and 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:

   a)   Significant judgements 

The following are the significant judgements, apart from those involving estimations (which are presented separately below), that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the Consolidated financial statements.

Operating lease contracts - the Group as lessor

The Group has acquired investment properties which are subject to commercial property leases and licences with tenants. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts for these leases as operating leases.

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:

   i.    Fair value hierarchy applied 
   a.   Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. 

b. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

c. Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

ii. Property is treated as acquired or disposed of when the significant risks and rewards of ownership have been assumed or relinquished by the Group. This occurs when:

a. it is probable that the future economic benefits that are associated with the property will flow to the Group;

   b.   there are no material conditions which could affect completion of the acquisition; and 
   c.   the cost of the investment property can be measured reliably. 

iii. Additions to property consist of construction, re-development, refurbishment and other directly attributable costs such as professional fees and expenses and capitalised interest where applicable.

iv. Property is initially measured at cost including related acquisition costs, and subsequently valued by the Group's Valuers at its respective fair value at each reporting date (30 June and 31 December). The difference between the fair value of a property at the reporting date and its carrying value prior to the external valuation is recognised in the Consolidated Statement of Comprehensive Income as a fair value gain or loss.

v. Share based payment fair value at grant date is estimated using a Monte Carlo simulation pricing model, taking into account the terms and conditions upon which the options are granted.

Control

The IFRS 10 control model focuses on whether the Group has power over an investee, exposure or rights to variable returns from its involvement with the investee, and ability to use its power to affect those returns. In particular, IFRS 10 requires the Group to consolidate investees that it controls on the basis of de facto control. In accordance with IFRS 10, the Group's assessment of control is performed on a continuous basis and the Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the elements of the control model.

   b)   Analysis of sources of estimation uncertainty 

The key future assumptions, and other key sources of estimation uncertainty for the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Fair value of investment property

The market value of investment property ("property") would normally be determined by a real estate 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 are valued on an individual basis.

The valuation of the Group's properties as at 31 December 2019 was completed by Lisney Limited ("Lisney") as external independent Valuer. Lisney prepared the valuation on the basis of market value in accordance with the Royal Institution of Chartered Surveyors ("RICS") Valuation - Global Standards (June 2017). Their valuation was subsequently reviewed by the Valuation Committee.

The Group's investment properties will next be valued by the Group's Valuers as at 30 June 2020. The valuers will continue to use recognised valuation techniques and the principles of IFRS 13 for the valuation as at 30 June 2020 and 31 December 2020. Refer to note 14 for further disclosure on the recognised valuation techniques.

The Board's Valuation Committee conducts a detailed review of each property valuation, the underlying valuation assumptions and the valuation process used by the valuer to ensure that valuation assumptions are valid and have been applied as set out below. Property valuations are complex and involve data which is not publicity available and a degree of judgement. Each valuation is based upon key assumptions, particularly estimated rental values and market-based yields. The valuation approach to on-going developments and material refurbishments is on a residual basis and factors such as the assumed timescale, the assumed future development costs and an appropriate finance and/or discount rate are used to determine the property value together with market evidence and recent comparable properties where appropriate.

The Directors are satisfied that the valuations of the Group's properties are appropriate for inclusion in the Consolidated and Company financial statements. The fair value of the Group's and Company's properties accurately reflects the valuation provided by Lisney and no changes to Lisney's valuation was made by the valuation committee. The valuation is based on the future cashflows from rental income both for the current lease period and future estimated rental values, adjusted for expected void periods and appropriate discount rates.

Calculation of loss allowance

When measuring expecting credit loss ("ECL") the Group uses reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements.

Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.

1.6 Rental and related income

The Group's main source of revenue is the leasing and licensing of properties. Lease and licence revenue is recognised over the period of the lease or licence contracts. Rental income is recognised as revenue at the time and amount governed by the lease or licence in place with the customer.

The Group recognise revenue from the following major activities:

   --      Operating lease income from the Group's investment properties; 
   --      License income from licencing of the Group's car park spaces; 

-- Service charge income from contributions received from tenants relating to property expenses.

Revenue is measured based on the consideration to which the Group's expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties.

Rental income

The Group receives rental income from tenants under leases associated with the Group's properties. Rental income is recognised on a straight line basis over the term of the lease.

Where a rent-free period is included as an incentive in a lease the rental income foregone is allocated evenly over the period from the first day of the lease to the earlier of termination date of the lease or first break option of the lease. Where a lease incentive takes the form of an incentive payment to a tenant the resultant cost is amortised evenly over the remaining life of the lease to its earliest termination date. The sum of unamortised incentives is included in trade and other receivables and is released over the term of the relevant leases. Lease adjustments such as rent reviews are included when the rent review or adjustment has been completed and agreed with the tenant.

License income

License income represents amounts under licences receivable from tenants associated with the licensing of the Group's car park spaces. License income is recognised over the term of the license. License adjustments such as reviews or extensions are included when the licence review, extension or adjustment has been completed and agreed with the tenant.

Service charge income

Service charge income from tenants are recognised as revenue in the period in which the related expenditure is incurred.

Surrender Premium

Where the Group receives a surrender premium from a tenant for the early termination of a lease, the proceeds, net of any then agreed costs associated with dilapidation and legal costs relating to that lease, is recognised in the accounting period in which the surrender took place.

1.7 Direct lease costs

Direct lease costs incurred in the negotiation and arrangement of new leases to tenants are initially capitalised and are then recognised as an expense over the period from the date of the lease to the earliest termination date of the lease.

1.8 Finance income and finance costs

The Group's finance income and finance costs include interest income, interest expense, commitment fees and related charges. Interest income or expense is recognised using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and costs paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

1.9 Taxation

Current tax

The Company elected for Real Estate Investment Trust ("REIT") status and on 21 May 2018 gave notice to Revenue that it was the principal company of a group REIT following the acquisition of the entire share capital of the Yew Tree Investment Fund (in Members Voluntary Liquidation). An Irish REIT or group REIT will not pay Irish corporation tax on profits and gains from its Property Rental Business. Corporation tax will still apply in the normal way in respect of its Residual Business which may include certain trading activities incidental to letting, letting of administrative property which is temporarily surplus to requirements, and certain income such as dividends from other Irish REITs. Corporation tax may also be payable in respect of profits arising in joint venture or co-investment arrangements where no REIT election has been made (or on the non-REIT proportion of the profits of joint ventures where an Irish REIT election has been made) and also where a member of a group or an interest in an investment vehicle (as opposed to property involved in the Property Rental Business) is sold. Other taxes such as VAT, stamp duty, local property tax and payroll taxes will also still apply in the normal way.

1.10 Financial instruments

Financial assets and liabilities are recognised when a Group entity becomes a party to the contractual provisions of the instruments.

Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities (other than financial assets or liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or liabilities, as appropriate, on initial recognition. Transaction costs attributable to the acquisition of financial assets or liabilities at fair value through profit or loss are recognised immediately in the Consolidated Statement of Comprehensive Income.

   i.   Cash and cash equivalents 

Cash and cash equivalents include cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Group and Company in the management of its short-term commitments.

ii. Trade and other receivables and trade and other payables

Trade receivables include amounts due from tenants. Other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade and other payables include amounts due to third party suppliers and prepaid rent amounts received from tenants in advance.

Trade and other receivables and trade and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method. The Group applies the simplified approach to trade receivables for which expected credit loss uses the lifetime expected credit allowance. The Group has no material exposure to bad debts as the majority of the Group's rental income is from State bodies or FDI entities that have good credit standing. The payment and credit performance of these tenants is closely monitored, therefore the expected credit loss is not material and has not been presented. Where there is evidence of credit loss appropriate allowances are recognised as bad debts in the Statement of Comprehensive income.

iii. Loans and borrowings

Loans are initially recorded at fair value plus transaction costs. They are subsequently accounted for at amortised cost.

1.11 Investment

Investments held as fixed assets are stated at fair value. Income from other investments together with any related taxation is recognised in the Consolidated Statement of Comprehensive Income in the year in which it is receivable.

Basis for consolidation

The Consolidated financial statements include the financial statements of the holding company (Yew Grove REIT plc) and all subsidiary companies as at 31 December 2019. Control is achieved when the Company has the power over the investee, exposure, or rights, to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the investor's returns. The results of subsidiaries acquired or disposed of during the financial period are included in the Consolidated Statement of Comprehensive Income from the effective date of control or to the effective date of loss of control as appropriate. All intragroup transactions, assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Upon acquisition of a business, fair values are attributed to the identifiable net assets acquired. The Group's accounting policy in relation to goodwill is set out in note 1.20.

There were no subsidiaries acquired in the current year. Details of the subsidiaries acquired during the prior financial period are outlined below and in Note 26.

Yew Tree Investment Fund plc (in Members Voluntary Liquidation)

The Consolidated financial statements for the period ended 31 December 2018 include the results of Yew Tree Investment Fund (in Members Voluntary Liquidation) from the date of acquisition of 8 June 2018 to the date of loss of control on 27 July 2018 following the appointment of a liquidator. At the Statement of Financial Position date, the liquidation of Yew Tree Investment Fund (in Members Voluntary Liquidation) had yet to be fully completed.

1.12 Property, Plant and Equipment

Office and computer equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation is recognised to write off the cost or value of assets less their residual value over their useful lives. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

The estimated useful lives for the main asset categories are:

Office and computer equipment: 3 years

1.13 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of acquisition, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquire. Acquisition-related costs are recognised in the Consolidated Statement of Comprehensive Income as incurred.

1.14 Interest in Joint Ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exits only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of joint ventures are incorporated in these Consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5.

An investment in a joint venture is accounted for using the equity method from the date on which the investee becomes a joint venture.

1.15 Foreign currency

Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the Statement of Financial Position date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated at the rates of exchange ruling at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. The resulting exchange differences are dealt with in the Consolidated and Company Statement of Comprehensive Income.

1.16 Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (a qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale) are included in the cost of the asset. All other borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the period in which they are incurred.

1.17 Pension

Annual contributions payable to the Group's pension scheme are charged to the Company Statement of Comprehensive Income in the period to which they relate.

1.18 Share Based Payments

The long term incentive plan arrangement ("LTIP") between the Company and its Executive Management is accounted for as an equity settled share based payment arrangement. The initial and only outstanding grants under this plan were made on 15 February 2019. On that date the Company estimated the fair value of each granted instrument and the number of equity instruments for which service, market and non-market performance conditions are expected to be satisfied. This initial estimate of the total share-based payment cost is expensed over the vesting period.

Subsequent to this initial recognition and measurement, the estimate of the number of equity instruments for which the service and non-market performance conditions are expected to be satisfied will be revised during the vesting period, (the period from 15 February 2019 to 15 February 2022). Ultimately, the share-based payment cost is based on the fair value of the number of equity instruments to be issued on satisfaction of these conditions (see note 25 for further details).

1.19 Share issue cost

Costs directly attributable to issuing new shares are deducted from retained earnings net of any related tax deduction. All other costs are recognised in the Company Statement of Comprehensive Income in the period in which they are incurred.

1.20 Goodwill

Goodwill arising on the acquisition of a subsidiary is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer's previously-held equity interest (if any) in the entity over the net fair value of the identifiable net assets recognised.

Goodwill is not amortised but is reviewed for impairment at least annually. Any impairment loss is recognised immediately in the Consolidated Statement of Comprehensive Income and is not subsequently reversed. Any gain on a bargain purchase is recognised in the statement of comprehensive income immediately.

1.21 Impairment of financial assets

The Group applies a three-stage expected credit loss model ("ECL") in relation to the impairment of its financial assets carried at amortised cost except for trade receivables for which the simplified approach is applied in accordance with IFRS 9. The ECL is used to account for expected credit losses and changes in those ECL at each reporting date to reflect changes in credit risk since initial recognition of the financial assets.

The expected credit loss is charged against the respective financial asset and recognised in the Consolidated Statement of Comprehensive income.

The three stages that determine the amount of impairment to be recognised as expected credit losses at each reporting date are as follows:

i. Stage 1: Credit risk has not increased significantly since initial recognition - recognise 12 months ECL;

ii. Stage 2: Credit risk has increased significantly since initial recognition - recognise lifetime ECL;

   iii.    Stage 3: Financial asset is credit impaired - recognise lifetime ECL. 

The 12 months ECL is calculated by multiplying the probability of a default occurring in the next 12 months by the total (lifetime) ECLs that would result from that default. Lifetime expected credit losses are the present value of expected credit losses that arise if a borrower defaults on its obligation at any point throughout the terms of the financial asset.

1.21 Impairment of financial assets

Definition of default

The Group considers the following as constituting events of default for internal credit risk management purposes as experience indicates that financial assets that meet the following criteria are generally not recoverable:

   i.     When there is a breach of financial covenants by the debtor; and 

ii. Information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collateral held by the Group).

Write off

The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.

2.Operating Segments

The Group is organised into two business segments, against which the Group reports its segmental information. These are Office Assets (including retail and mixed use buildings) and Industrial Assets. All of the Group's operations are in the Republic of Ireland. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who has been identified as the Board of Directors of the Company.

Unallocated income and expenses are items incurred centrally which are neither directly attributable nor reasonably allocable to individual segments. Unallocated assets are cash and cash equivalents, and certain other assets.

The Group's key measures of performance of a segment are net rental income and the movement in fair value of properties, as these measures illustrate and emphasize that segment's contribution to the reported profits of the Group and the input of that segment to earnings per share. By focusing on these prime performance measures, other key statistical data such as capital expenditure and one off exceptional items are separately highlighted for analysis and attention.

Revenue as stated in the Consolidated Statement of Comprehensive Income relates to rental income from its investment in commercial properties held by the Group, license income from the licensing of the Group's car park spaces and service charges received by its subsidiary management companies.

The reporting segments are new in the current financial year, the change is a result of the size of the portfolio increasing and identification by management of the differing returns between the two identified segments.

Major Customers

Included in gross rental income are rents of EUR4.6m (2018: EUR1.3m) which arise from the Group's three largest tenants, each of which contributed more than 10% of the Group's revenue. No other single tenant contributed more than 10% of the Group's revenue in 2019 and 2018.

 
                                                                                                              Unallocated 
                                              Office                    Industrial                               expenses 
                                              Assets                        Assets                             and assets                Group Total 
                                                2019                          2019      Total 2019                   2019                       2019 
                                                 EUR                           EUR             EUR                    EUR                        EUR 
 Year ended 
 31 December 
 2019 
 Rental 
  income and 
  related 
  income                                   8,382,108                     1,564,616       9,946,724                      -                  9,946,724 
 Property 
  outgoings                                (500,365)                      (27,583)       (527,948)                      -                  (527,948) 
              --------------------------------------  ----------------------------  --------------  ---------------------  ------------------------- 
 Net rental 
  income                                   7,881,743                     1,537,033       9,418,776                      -                  9,418,776 
 Net 
  movement 
  on fair 
  value of 
  investment 
  properties                             (1,063,004)                       294,721       (768,283)                      -                  (768,283) 
 Gain on 
  Sale of 
  investment 
  property                                         -                       123,174         123,174                      -                    123,174 
              --------------------------------------  ----------------------------  --------------  ---------------------  ------------------------- 
 Net fair 
  value 
  movement                               (1,063,004)                       417,895       (645,109)                      -                  (645,109) 
 
 Operating 
  expenses                                         -                             -               -            (3,714,458)                (3,714,458) 
 
 Profit 
  before tax                               6,818,739                     1,954,928       8,773,667            (3,714,458)                  5,059,209 
              --------------------------------------  ----------------------------  --------------  ---------------------  ------------------------- 
 
 
  As at 31 
  December 
  2019 
              --------------------------------------  ----------------------------  --------------  ---------------------  ------------------------- 
 Investment 
  properties                              88,200,000                    27,590,000     115,790,000                      -                115,790,000 
              --------------------------------------  ----------------------------  --------------  ---------------------  ------------------------- 
 
 
                                                                                                   Unallocated 
                                     Office                    Industrial                             expenses 
                                     Assets                        Assets                           and assets                Group Total 
                                       2018                          2018    Total 2018                   2018                       2018 
                                        EUR                           EUR           EUR                    EUR                        EUR 
 Year ended 
 31 December 
 2018 
 Rental 
  income and 
  related 
  income                          2,328,381                       436,314     2,764,695                      -                  2,764,695 
 Property 
  outgoings                       (179,829)                      (24,522)     (204,351)                      -                  (204,351) 
               ----------------------------  ----------------------------  ------------  ---------------------  ------------------------- 
 Net rental 
  income                          2,148,552                       411,792     2,560,344                      -                  2,560,344 
 
   Net 
   movement 
   on fair 
   value of 
   investment 
   properties                       617,389                       991,737     1,609,126                      -                  1,609,126 
 
 Operating 
  expenses                                -                             -             -            (1,831,053)                (1,831,053) 
 
 Profit 
  before tax                      2,765,941                     1,403,529     4,169,470            (1,831,053)                  2,338,417 
               ----------------------------  ----------------------------  ------------  ---------------------  ------------------------- 
 
 
  As at 31 
  December 
  2018 
               ----------------------------  ----------------------------  ------------  ---------------------  ------------------------- 
 Investment 
  properties                     64,185,000                    13,730,000    77,915,000                      -                 77,915,000 
               ----------------------------  ----------------------------  ------------  ---------------------  ------------------------- 
 

3. Rental and related income

 
                             31 December 2019   5 April 2018 
                                          EUR             to 
                                                 31 December 
                                                        2018 
                                                         EUR 
--------------------------  -----------------  ------------- 
 Gross rental income                7,337,846      2,556,944 
  License income                      243,015         56,789 
  Service charge income               365,863        150,962 
  Lease surrender premium           2,000,000              - 
--------------------------  -----------------  ------------- 
 Net rental income                  9,946,724      2,764,695 
--------------------------  -----------------  ------------- 
 

Gross rental income represents amounts receivable from tenants under leases associated with the Group's property business. License income represents amounts under licences receivable from tenants associated with the licensing of the Group's car park spaces. Service charge income relates to contributions from tenants of the Group's buildings for property expenses of the occupied buildings. Service charge income receivable from tenants is recognised in the period in which the related expenditure is recognised.

During the period the company agreed terms on the surrender of a lease at its property Office Block, Unit 2600, in Cork Airport Business Park. The lease surrender took effect on 30 June 2019. Of the EUR3 million surrender premium agreed, EUR2 million was for lease surrender recognised as part of revenue and EUR1 million for dilapidations recognised as part of the fair value gains. The total expenditure on dilapidations to 31 December 2019 was EUR215,905 leaving a gain of EUR784,095 on dilapidations which is recognised as part of the fair value gains (Note 5).

4. Property expenses

 
                                                 5 April 2018 
                              31 December 2019             to 
                                           EUR    31 December 
                                                         2018 
                                                          EUR 
-------------------------  -------------------  ------------- 
 Service charge expenses               329,552        157,581 
  Direct property costs                172,396         32,100 
  Car park costs                        26,000         14,670 
-------------------------  -------------------  ------------- 
 Total                                 527,948        204,351 
-------------------------  -------------------  ------------- 
 

Property expenses include service charges and other costs directly recoverable from tenants, and non-recoverable costs directly attributable to the Group's properties. Service charge expenses typically include security, insurance, maintenance and other costs of managing the buildings due from and recharged to tenants.

5. Fair value (Loss) /Gain on investment properties

 
                                                                  5 April 2018 
                                               31 December 2019             to 
                                                            EUR    31 December 
                                                                          2018 
                                                                           EUR 
------------------------------------------  -------------------  ------------- 
 Fair value (losses)/gains on investment 
  properties (1)                                      (768,283)      1,609,126 
  Realised gain on disposal of investment 
   property                                             123,174              - 
------------------------------------------  -------------------  ------------- 
 Total                                                (645,109)      1,609,126 
------------------------------------------  -------------------  ------------- 
 

(1) The Fair value (losses)/gains on investment properties includes a gain on lease surrender premium of EUR784,095.

A valuation of the Group's properties as at 31 December 2019 was completed by Lisney Limited ("Lisney") as external independent valuer Lisney prepared the valuation on the basis of market value in accordance with the Royal Institution of Chartered Surveyors ("RICS") Valuation - Global Standards (June 2017). Their valuation was subsequently reviewed by the Valuation Committee.

During the year the company agreed terms on the surrender of a lease at its property Office Block, Unit 2600, in Cork Airport Business Park.

6. AIFM Fees

 
                                   5 April 2018 
                31 December 2019             to 
                             EUR    31 December 
                                           2018 
                                            EUR 
-----------  -------------------  ------------- 
 AIFM Fees                95,833         70,378 
-----------  -------------------  ------------- 
 Total                    95,833         70,378 
-----------  -------------------  ------------- 
 

The Company is required, as a REIT, to have an alternative investment fund manager ("AIFM"). The Company has agreed with Ballybunion Capital, an AIFM authorised by the Central Bank of Ireland, for it to act as the external AIFM of the Group, subject to overall supervision of the AIFM by the Board. The fees above are fees paid to the AIFM in accordance with the service level agreement between the AIFM and the Company.

 
 
           7. Goodwill 
                                             5 April 2018 
                           31 December 2019            to 
                                              31 December 
                                                     2018 
                                        EUR           EUR 
-----------------------  ------------------  ------------ 
Impairment of goodwill                    -       238,750 
 Negative goodwill                        -      (58,739) 
-----------------------  ------------------  ------------ 
Total                                     -       180,011 
-----------------------  ------------------  ------------ 
 

As referred to in note 26, in the prior period goodwill arose on the acquisition of 100% of the class B ordinary share capital of Yew Tree Investment Fund (in Members Voluntary Liquidation). The fair value of unamortised loan facility costs with a book value of EUR238,750 included in trade receivables was estimated to have a recoverable amount of EURnil at the acquisition date. This gave rise to goodwill of EUR238,750 at the date of acquisition. The goodwill was subsequently reviewed for impairment and an impairment charge was taken to the Statement of Comprehensive Income in the prior period.

Goodwill also arose in the prior period on the acquisition of Gateway Estate Management Company Limited by Guarantee (refer to note 26) as the company was acquired on 2 July 2018 for nil consideration following the acquisition of One and Three Gateway, East Wall Road, Dublin 3. As nil consideration was paid this resulted in negative goodwill of EUR58,739 at the date of acquisition. In line with the Group's accounting policy, n egative goodwill of EUR58,739 was taken directly to the Statement of Comprehensive Income during the prior period.

The carrying value of the Goodwill at the Statement of Financial Position date was nil.

8. Finance costs

 
 
                                               31 December     5 April 2018 
                                                      2019               to 
                                                       EUR      31 December 
                                                                       2018 
                                                                        EUR 
------------------------------------------  --------------  --------------- 
 Effective interest expense on borrowings          669,384           15,412 
------------------------------------------  --------------  --------------- 
 Total                                             669,384           15,412 
------------------------------------------  --------------  --------------- 
 

The effective interest expense on borrowings arises as a result of the recognition of interest expense, commitment fees and arrangement fees using the effective interest rate method.

9. Administration expenses

Profit before tax for the financial period has been stated after charging:

 
                                                         5 April 2018 
                                           31 December             to 
                                                  2019    31 December 
                                                   EUR          2 018 
                                                                  EUR 
--------------------------------------  --------------  ------------- 
 Capital reduction costs 
  Staff costs (Note 10)                              -        108,667 
  Independent Non-executive Directors        1,581,426        400,731 
  (Note 25)                                    230,000        129,169 
  Listing expenses                              18,859        160,329 
  Property valuation fees                       69,000         53,639 
  Property management fees                      88,842         60,936 
  Legal and consultancy fees                   195,746         87,637 
  Independent accountant fees                   57,912         73,888 
  Audit and interim review fees                 75,000         65,000 
  Depository fees                               57,601              - 
  Liquidation costs                                  -        119,589 
  Other costs                                  574,855        309,140 
--------------------------------------  --------------  ------------- 
 Total                                       2,949,241      1,568,725 
--------------------------------------  --------------  ------------- 
 

Staff costs represents total remuneration and other benefits paid to all employees and officers for the financial period. Further information on Directors' remuneration can be found in note 25 to the Consolidated financial statements.

Capital reduction costs relate to the Company's application to the Court to reduce the amount standing to the credit of the Company's share premium account by the sum of EUR70,250,000 in the prior year. The Company's application to the Court was approved on 1 November 2018. Refer to note 21 for further details.

Liquidation costs relate to the Yew Tree Fund see Note 26 for further details.

Auditor's remuneration

 
                                                              5 April 2018 
                                                31 December             to 
                                                       2019    31 December 
                                                        EUR          2 018 
                                                                       EUR 
-------------------------------------------  --------------  ------------- 
 Company 
  Audit of entity financial statements               45,000         42,500 
  Other assurance services                           20,000        195,000 
  Tax advisory services                                   -              - 
  Other non-audit services                                -              - 
-------------------------------------------  --------------  ------------- 
 Company total                                       65,000        237,500 
-------------------------------------------  --------------  ------------- 
 
   Group 
   Audit of the Group financial statements           10,000         10,000 
   Other assurance services                               -              - 
   Tax advisory services                                  -              - 
   Other non-audit services                               -              - 
-------------------------------------------  --------------  ------------- 
 Group total                                         10,000         10,000 
-------------------------------------------  --------------  ------------- 
 
 

Other assurance services in 2018 include fees paid in respect to the role of reporting accountant at Admission to trading on AIM and the Euronext Growth market, review of the Interim Report, and Report on the Initial Financial Statements. In 2019 the other assurance services was the review of the Interim Report.

10. Employment

The average monthly number of employees (including Directors and excluding Non-Executive Directors) directly employed during the year to 31 December 2019 in the Group and Company was 6. The Company had no employees prior to Admission (8 June 2018) and six as at 31 December 2019.

 
 Total employees and officers at financial 
  period end: 
                                                                     2019                            2018 
                                                                   Number                          Number 
-------------------------------------------  ----------------------------  ------------------------------ 
 At financial period end: 
  Executive Directors                                                 3 3                               3 
  Office staff                                                          4                               2 
  Non-Executive Directors (Note 25)                                                                     4 
-------------------------------------------  ----------------------------  ------------------------------ 
 Total employees and officers                                          10                               9 
-------------------------------------------  ----------------------------  ------------------------------ 
 

T he staff costs for the above employees were:

 
 
                                                               5 April 2018 
                                               31 December               to 
                                                      2019      31 December 
                                                       EUR            2 018 
                                                                        EUR 
------------------------------------------  --------------  --------------- 
 Wages and salaries                                577,901          421,158 
  Bonus accrual                                    633,429                - 
  Social insurance cost                             62,991           23,031 
  Share based payments and other benefits 
   (Note 25)                                       133,321                - 
  Pension costs - defined contribution 
   plan                                            163,445           71,266 
  Other benefits - Health insurance                 10,339           14,445 
------------------------------------------  --------------  --------------- 
 Total staff costs                               1,581,426          529,900 
------------------------------------------  --------------  --------------- 
 Independent Non-executive Directors 
  (Note 25)                                        230,000          129,169 
------------------------------------------  --------------  --------------- 
 

Staff costs are allocated to administration expenses during the financial period.

11. Income tax

Current tax: current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Yew Grove REIT plc has elected for Real Estate Investment Trust ("REIT") status under section 705E Tax Consolidation Act 1997. As a result, the Group does not pay Irish corporation tax on the profits and gains from its qualifying rental business in Ireland provided it meets certain conditions. With certain exceptions, corporation tax is still payable in the normal way in respect of income and gains from a Group's Residual Business, that is its non-property rental business.

 
 
                                                            5 April 2018 
                                            31 December               to 
                                                   2019      31 December 
                                                    EUR            2 018 
                                                                     EUR 
--------------------------------------  ---------------  --------------- 
 Income tax on residual income                        -                - 
  Current period charge                               -            4,538 
--------------------------------------  ---------------  --------------- 
 Income tax expense for the financial 
  period                                              -            4,538 
--------------------------------------  ---------------  --------------- 
 

Reconciliation of the income tax expense for the financial period

 
 
                                                                 5 April 2018 
                                                 31 December               to 
                                                        2019      31 December 
                                                         EUR            2 018 
                                                                          EUR 
--------------------------------------------  --------------  --------------- 
 Profit before tax                                 5,059,209        2,338,417 
  Tax charge on profit at standard rate 
   of 12.5%                                          632,401          292,302 
  Non-taxable revaluation surplus                          -        (201,140) 
  REIT tax-exempt profits                          (632,401)         (91,162) 
  Other (charge on subsidiary undertakings)                -            4,538 
--------------------------------------------  --------------  --------------- 
 Income tax expense for the financial 
  period                                                   -            4,538 
--------------------------------------------  --------------  --------------- 
 

The directors confirm that in their opinion having conducted due enquiries the Group and the Company have remained in full compliance with the Irish REIT rules and regulations up to and including the date of the approval of this report.

12. Earnings per share and EPRA Earnings per share

 
 
                                                              5 April 2018 
   WEIGHTED AVERAGE NUMBER OF SHARES          31 December               to 
                                                     2019      31 December 
                                                      EUR            2 018 
                                                                       EUR 
-----------------------------------------  --------------  --------------- 
 Issued share capital at beginning             75,000,000                - 
  of the financial period 
 Shares issued during the financial 
  period                                       36,772,210       75,000,000 
-----------------------------------------  --------------  --------------- 
 Share in issue at financial period 
  end                                         111,772,210       75,000,000 
-----------------------------------------  --------------  --------------- 
 Weighted average number of shares             81,095,292       57,231,482 
-----------------------------------------  --------------  --------------- 
 Share based payments payable - dilutive          125,222                - 
  effect 
-----------------------------------------  --------------  --------------- 
 Diluted number of shares                      81,220,514       57,231,482 
-----------------------------------------  --------------  --------------- 
 
 
 
                                                                   5 April 2018 
                                                   31 December               to 
   BASIC AND DILUTED EARNINGS PER SHARE                   2019      31 December 
                                                           EUR            2 018 
                                                                            EUR 
----------------------------------------------  --------------  --------------- 
 Profit for the financial period attributable 
  to the owners of the Group                         5,059,209        2,333,879 
----------------------------------------------  --------------  --------------- 
 
                                                           EUR              EUR 
----------------------------------------------  --------------  --------------- 
 Weighted average number of ordinary 
  shares (basic)                                    81,095,292       57,231,482 
  Weighted average number of ordinary 
   shares (diluted)                                 81,220,514       57,231,482 
  Basic earnings per share (cent)                         6.24             4.08 
----------------------------------------------  --------------  --------------- 
 Diluted earnings per share (cent)                        6.23             4.08 
----------------------------------------------  --------------  --------------- 
 

Earnings per share

The basic and diluted earnings per ordinary share of 6.24 and 6.23 cents per share (2018: 4.08) is based on the profit for the financial period of EUR5,059,209 and on 81,095,292 ordinary shares (2018: EUR2,333,879 and on 57,231,482 ordinary shares) being the weighted average number of shares in issue for the year.

 
 
      EPRA Earnings per share                                 5 April 2018 
                                              31 December               to 
                                                     2019      31 December 
                                                      EUR            2 018 
                                                                       EUR 
-----------------------------------------  --------------  --------------- 
 Profit for the financial period                5,059,209        2,333,879 
 Adjusted for: 
  Change in the fair value of investment 
   property                                       768,283      (1,609,126) 
  (Gain)/loss on disposal of investment 
   property                                     (123,174)                - 
-----------------------------------------  --------------  --------------- 
 Total EPRA earnings                            5,704,318          724,753 
 EPRA EPS (Basic)                                    7.03             1.26 
  EPRA EPS (Diluted)                                 7.02             1.26 
-----------------------------------------  --------------  --------------- 
 

13. IFRS and EPRA NAV per share

The IFRS NAV is calculated as the value of the Group's assets less the value of its liabilities based on IFRS measures. EPRA NAV is calculated with accordance with the European Real Estate Association ("EPRA") Best Practice Recommendations: November 2016.

EPRA net asset value ("EPRA NAV") is defined as the IFRS assets including properties and other investment interests at fair value and to exclude certain items not expected to crystallise in a long-term investment property business.

 
 
                                                          5 April 2018 
                                          31 December               to 
                                                 2019      31 December 
                                                  EUR            2 018 
                                                                   EUR 
-------------------------------------  --------------  --------------- 
 IFRS net assets at end of financial 
  period                                  109,922,541       75,133,180 
  Ordinary shares in issue                111,772,210       75,000,000 
-------------------------------------  --------------  --------------- 
 IFRS NAV per share (cent)                      98.52           100.18 
-------------------------------------  --------------  --------------- 
 Ordinary shares in issue                 111,772,210       75,000,000 
-------------------------------------  --------------  --------------- 
 Diluted number of shares                 111,697,432       75,000,000 
-------------------------------------  --------------  --------------- 
 Diluted IFRS NAV per share (cent)              98.41           100.18 
-------------------------------------  --------------  --------------- 
 
 
 
                                                          5 April 2018 
                                          31 December               to 
                                                 2019      31 December 
                                                  EUR            2 018 
                                                                   EUR 
-------------------------------------  --------------  --------------- 
 IFRS net assets at end of financial 
  period 
  Net market to market on financial       109,922,541       75,133,180 
  assets                                            -                - 
-------------------------------------  --------------  --------------- 
 EPRA NAV                                 109,922,541       75,133,180 
-------------------------------------  --------------  --------------- 
 EPRA NAV per share (cent)                      98.52           100.18 
-------------------------------------  --------------  --------------- 
 

14. Investment properties

   a)   Group and Company 
 
 
                                                            5 April 2018 
                                       31 December 2019               to 
                                                    EUR      31 December 
                                                                   2 018 
                                                                     EUR 
 ------------------------------------------------------  --------------- 
 Opening balance                             77,915,000                - 
  Acquired by distribution in specie                  -       25,910,000 
  Property purchases                         39,546,096       50,147,611 
  Disposal of property                        (950,000)                - 
  Development expenditure                       831,282          248,263 
  Lease surrender dilapidations premium       (784,095)                - 
  Fair value (loss)/gain on investment 
   properties                                 (768,283)        1,609,126 
-----------------------------------------  ------------  --------------- 
 Closing fair value                         115,790,000       77,915,000 
-----------------------------------------  ------------  --------------- 
 
 

During the prior financial period the Company acquired 100% of the B ordinary shares in the Yew Tree Investment Fund (in Members Voluntary Liquidation). By this acquisition the Company secured 10 properties with a fair value as at 30 June 2018 of EUR25,910,000. The Company has since received all the properties and the majority of the cash from the Yew Tree Investment Fund (in Members Voluntary Liquidation) through distribution in specie following the Members Voluntary Liquidation of the Fund. In 2018 the Company purchased a total of six buildings comprising two portfolios and one other building for EUR50,147,611 including costs.

In 2019 the Group acquired Office Block A, located in the IDA Waterford Business and Technology Park, Butlerstown, Waterford for EUR4,307,733 (vendor price of EUR4,000,000 and transaction costs of EUR307,733) and Office Block, Unit 2600, located in the Cork Airport Business Park, Cork for EUR8,005,107 (vendor price of EUR7,500,000 and transaction costs of EUR505,107). A portfolio of three industrial buildings at the IDA Business and Technology Park, Garrycastle, Athlone was acquired for EUR13,959,612 (vendor price of EUR13,000,000 and transaction costs of EUR959,612) and an Office building at the IDA Ireland Business and Technology Park, Garrycastle, Athlone for EUR13,044,609 (vendor price of EUR12,000,000 and transaction costs of EUR1,044,609)

The Group disposed of an industrial property, at Heather Road, Sandyford, for EUR1.1 million, the carrying value of the building was EUR950,000, a net gain of EUR123,174 after disposal costs and derecognition of the carrying value.

During the period the Group also completed the development of a car park on the IDA Athlone Business and Technology Park, Athlone, Westmeath and purchased additional car parking spaces at One Gateway, Dublin 3 for EUR229,035 (vendor price of EUR192,000 and transaction costs of EUR37,000) the building and other spaces were acquired in 2018.

A valuation is conducted on the Group's owned properties on 30 June and 31 December each year based upon the key assumptions of estimated rental values and market-based yields. In determining fair value, the valuers refer to market evidence and recent transaction prices for similar properties.

The Directors are satisfied that the valuation of the Group's properties is appropriate for inclusion in the accounts. The fair value of the Group's properties owned at 31 December 2019 is based on the valuation provided by the external independent Valuers, Lisney. This valuation is prepared on the basis of market value in accordance with the Royal Institution of Chartered Surveyors Valuation - Global Standards (June 2017) and the principles of IFRS 13.

Fair value

The valuation technique used in determining the fair value of the property assets is market value as defined by the Royal Institution of Chartered Surveyors Valuation, being the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion. This is in accordance with IFRS 13.

The main inputs for property valuation using a market-based capitalisation approach are the ERV ("Estimated Rental Value") and equivalent yield. ERV is a valuer's opinion as to the open market rental value of a property on a valuation date which could reasonably be expected to be the achievable rent for a new letting of that property on the valuation date. ERVs are not generally directly observable and therefore classified as Level 3 inputs. Equivalent yields depend on the valuer's assessment of market capitalisation rates and are therefore Level 3 inputs. There were no transfers between fair value levels in 2019 and 2018.

Details of the Group's investment properties and information about the fair value hierarchy using unobservable inputs (level 3) at 31 December 2019:

 
                                                                      Range 
 Asset Class            Market value   Input                Low      Median      High 
                       -------------  -----------------  --------  ---------  --------- 
 Commercial Property                     ERV per sq. 
  Assets                 EUR115.8m            ft          EUR4.00   EUR12.00   EUR33.34 
                       -------------  -----------------  --------  ---------  --------- 
                                       Equivalent yield 
                                               %           6.49%     7.77%      10.09% 
                       -------------  -----------------  --------  ---------  --------- 
 

at 31 December 2018:

 
                                                                      Range 
 Asset Class            Market value   Input                Low      Median      High 
                       -------------  -----------------  --------  ---------  --------- 
 Commercial Property                     ERV per sq. 
  Assets                  EUR77.9m            ft          EUR4.00   EUR11.98   EUR33.33 
                       -------------  -----------------  --------  ---------  --------- 
                                       Equivalent yield 
                                               %           6.44%     8.23%      10.23% 
                       -------------  -----------------  --------  ---------  --------- 
 

Sensitivity of measurement to variance of significant unobservable inputs

A decrease in the ERV will decrease the fair value. An increase in equivalent yield will decrease the fair value. There are interrelationships between these rates as they are partially determined by market rate conditions.

The table below shows the sensitivity of the Group's properties to changes in equivalent yield and ERV, which have been identified as key sensitivities by the directors. A change in long term vacancy rate was not considered significant and was not therefore tested, as the Group's long-term vacancy rates are low and lease contracts are long in duration.

Across the entire portfolio of investment properties, a 0.25% increase in equivalent yield would have the impact of a EUR4.0m (2018: EUR3.0m) reduction in fair value whilst a 0.25% decrease in yield would result in a fair value increase of EUR4.2m (2018: EUR3.3m), and a 5% increase in ERV would have the impact of a EUR5.0m (2018: EUR3.3m) increase in fair value whilst a 5% decrease in ERV would result in a fair value decrease of EUR5.1m (2018: EUR3.3m).

At 31 December 2019

 
                            Market     Value    Value         Value                Value 
                             Value       +5%      -5%        +0.25%    -0.25% Equivalent 
                                      in ERV       in    Equivalent                Yield 
                                                  ERV         Yield 
                                         EUR      EUR           EUR                  EUR 
 
 Commercial property 
  assets                 EUR115.8m      5.0m   (5.1m)        (4.0m)                 4.2m 
 
 Total                                  5.0m   (5.1m)        (4.0m)                 4.2m 
----------------------  ----------  --------  -------  ------------  ------------------- 
 

at 31 December 2018

 
                           Market     Value    Value         Value                Value 
                            Value       +5%      -5%        +0.25%    -0.25% Equivalent 
                                     in ERV       in    Equivalent                Yield 
                                                 ERV         Yield 
                                        EUR      EUR           EUR                  EUR 
 
 Commercial property 
  assets                 EUR77.9m      3.3m   (3.3m)        (3.0m)                 3.2m 
 
 Total                                 3.3m   (3.3m)        (3.0m)                 3.2m 
----------------------  ---------  --------  -------  ------------  ------------------- 
 

15. Computer equipment

a) Group and Company

 
 Costs                     Computer 
                          Equipment     Total 
                                EUR       EUR 
---------------------  ------------  -------- 
 At 1 January 2019                -         - 
  Additions                   5,575     5,575 
----------------------  -----------  -------- 
 At 31 December 2019          5,575     5,575 
----------------------  -----------  -------- 
 
 

Accumulated Depreciation

 
 At 1 January 2019            -        - 
  Charge for the year     (858)    (858) 
----------------------  -------  ------- 
 At 31 December 2019      (858)    (858) 
----------------------  -------  ------- 
 
 
 Net Book Value 31 December 2019    4,717   4,717 
---------------------------------  ------  ------ 
 Net Book Value 31 December 2018        -       - 
---------------------------------  ------  ------ 
 

16. Interest in joint venture (Group)

Details of the Group's only joint venture at the end of the reporting period was as follows:

 
    Name of joint            Country of            Nature          Investment        Votes controlled     Carrying 
       venture              Incorporation          of the                                 by the           amount 
                                                  business                                Company        31 December 
                                                                                                            2019 
                           Friends First 
                          House, Cherrywood     Private 
                              Science &          Limited 
                             Technology          Company. 
 Ashtown Management     Park, Loughlinstown,     Management    Ashtown Management 
  Company Limited            Co. Dublin,         of common       Company Limited 
  (Joint venture)              Ireland           areas           (Joint venture)           50%            EUR3,473 
                      -----------------------  -------------  --------------------  -----------------  ------------- 
 

This joint venture is accounted for using the equity method in these Consolidated financial statements as set out in the Group's accounting policies in note 1.

The Group acquired its interest in the joint venture in the prior when it acquired the entire class B ordinary share capital of the Yew Tree Investment Fund (in Members Voluntary Liquidation) on 8 June 2018. The share of profits attributable to the Group for the year ended 31 December 2019 and the period from 8 June 2018 to 31 December 2018 are as follows;

 
 
 
                                           31 December     31 December 
                                                  2019           2 018 
                                                   EUR             EUR 
-------------------------------------  ---------------  -------------- 
 Distribution in specie on 8 June 
  2018 
  Share of joint venture profits for                 -               - 
  the period                                         -           3,473 
-------------------------------------  ---------------  -------------- 
 Period ended 31 December 2019                       -           3,473 
-------------------------------------  ---------------  -------------- 
 

The joint venture broke-even for the year ended 2019 (2018: EUR6,946). Summarised financial information in respect to the results of the joint venture to 31 December 2019 is as follows:

 
 
                                                             5 April 2018 
                                             31 December               to 
                                                    2019      31 December 
                                                     EUR            2 018 
                                                                      EUR 
 -------------------------------------------------------  --------------- 
 Revenue                                         306,908          178,198 
 
  Profit post tax from continuing operations           -            6,946 
  Profit for the period                                -            6,946 
----------------------------------------------  --------  --------------- 
 Total comprehensive income                            -            6,946 
----------------------------------------------  --------  --------------- 
 
 

The balance sheet value of the Company's interest in a joint venture as at 31 December 2019 is as follows:

 
 
 
                        31 December 2019     31 December 
                                     EUR           2 018 
                                                     EUR 
 ---------------------------------------  -------------- 
 Cash and cash equivalents        61,126         122,349 
  Trade and other payables      (54,180)       (115,403) 
----------------------------  ----------  -------------- 
 As at 31 December 2019            6,946           6,946 
----------------------------  ----------  -------------- 
 
 

17. Trade and other receivables

 
      a) Group 
 
                                          31 December     31 December 
                                                 2019           2 018 
                                                  EUR             EUR 
-------------------------------------  --------------  -------------- 
 Trade receivables and prepayments            634,879         201,214 
  Taxation debtors - VAT recoverable          231,311         160,081 
  Deposit paid                              2,530,000               - 
  Other receivables                           131,564         203,805 
-------------------------------------  --------------  -------------- 
 Total                                      3,527,754         565,100 
-------------------------------------  --------------  -------------- 
 

Trade receivables include amounts due from tenants for rental and service charges. The balance of trade and other receivables has no concentration of credit risk as it covers mainly prepayments. The directors therefore consider the carrying value of trade and other receivables approximates to their fair value.

A deposit of EUR2,530,000 was paid following an exchange of contracts to purchase a portfolio of six office buildings at Millennium Park, Naas, County Kildare on 19 December 2019 (Note 30).

 
      b) Company 
 
                                          31 December     31 December 
                                                 2019           2 018 
                                                  EUR             EUR 
-------------------------------------  --------------  -------------- 
 Trade receivables and prepayments            214,390         199,090 
  Taxation debtors - VAT recoverable          231,311         160,081 
  Deposit paid                              2,530,000               - 
  Other receivables                           256,418         203,805 
-------------------------------------  --------------  -------------- 
 Total                                      3,232,119         562,976 
-------------------------------------  --------------  -------------- 
 

Trade receivables include amounts due from tenants. Other receivables are inclusive of EUR124,854 (2018: EUR159,354) due from the liquidator of the Yew Tree Investment Fund (in Members Voluntary Liquidation).

On 27 July 2018, the Yew Tree Investment Fund was placed into Members' Voluntary Liquidation ("MVL") with the expectation that the Fund's properties and cash be distributed in specie to the Company as the 100% owner of the B ordinary shares. In the financial period to 31 December 2018 EUR31,234,552 (EUR25,910,000 in investment properties and EUR5,324,552 in cash) of the Fund's assets were distributed in specie to the Company. There was distribution of EUR34,500 made in 2019. The directors expect to receive a distribution of the remaining assets of the Fund in 2020.

Other than the amounts due from the liquidator of Yew Tree Investment Fund (in Members Voluntary Liquidation) the balance of trade and other receivables has no concentration of credit risk as it covers mainly prepayments and amounts due from tenants. The directors therefore consider the carrying value of trade and other receivables approximates to their fair value.

18. Cash and cash equivalents

   a)   Group 
 
 
 
                              31 December     31 December 
                                     2019           2 018 
                                      EUR             EUR 
 ----------------------------------------  -------------- 
 Cash and cash equivalents     14,577,461       4,823,734 
----------------------------  -----------  -------------- 
 
 
   b)   Company 
 
 
 
                              31 December     31 December 
                                     2019           2 018 
                                      EUR             EUR 
 ----------------------------------------  -------------- 
 Cash and cash equivalents     14,086,632       4,364,045 
----------------------------  -----------  -------------- 
 
 

As part of the company's facility agreement rent paid in advance on the facilities secured is collected into a rent account controlled by the bank. The amount of this cash as at 31 December 2019 was EUR778,352. Rent in excess of accrued facility interest is released at the end of each quarter to an account controlled by the Group.

The management of cash and cash equivalents is discussed in detail in note 28.

19. Trade and other payables

 
      a) Group 
 
                                      31 December 2019     31 December 
                                                   EUR           2 018 
                                                                   EUR 
---------------------------------  -------------------  -------------- 
 Trade payables and accruals                 3,061,571       2,302,163 
  Taxation creditors - PAYE/PRSI                22,698          19,729 
  Borrowings                                    16,053          11,837 
  Other payables                               477,335               - 
---------------------------------  -------------------  -------------- 
 Total                                       3,577,657       2,333,729 
---------------------------------  -------------------  -------------- 
 

Trade payables include amounts due to third party suppliers and prepaid rent amounts received from tenants in advance. Accrued expenses include operational expenses incurred but not yet invoiced to the Group as at 31 December 2019. Trade and other payables are interest free and have settlement dates within one year. The Directors consider that the carrying value of the trade and other payables approximates to their fair value.

 
      b) Company 
 
                                      31 December     31 December 
                                             2019           2 018 
                                              EUR             EUR 
---------------------------------  --------------  -------------- 
 Trade payables and accruals            2,528,784       2,068,385 
  Taxation creditors - PAYE/PRSI           22,698          19,729 
  Borrowings                               16,053          11,837 
  Other payables                          477,335               - 
---------------------------------  --------------  -------------- 
 Total                                  3,044,870       2,099,951 
---------------------------------  --------------  -------------- 
 

Trade payables includes amounts due to third party suppliers and prepaid rent amounts received from tenants in advance. Accrued expenses include operational expenses incurred but not yet invoiced to the Company as at 31 December 2019. Trade and other payables are interest free and have settlement dates within one year. The Directors consider that the carrying value of the trade and other payables approximates to their fair value.

20. Borrowings

The Company has a revolving credit facility with Allied Irish Bank plc ("AIB"), secured by fixed and floating charges over certain property assets, the existing facility of EUR19,954,000 (December 2018) was extended with a second tranche in July 2019, increasing available funds by EUR9,120,000, for a total facility of EUR29,074,000. The facility can be repaid and re-drawn without penalty throughout its 3 years expected life. This facility was measured initially at fair value, after transaction costs, and carried at amortised cost, with all attributable costs charged to Consolidated Statement of Comprehensive Income over the life of the facility.

a) Group and Company

 
 
                                                            5 April 2018 
                                       31 December 2019               to 
                                                    EUR      31 December 
                                                                   2 018 
                                                                     EUR 
----------------------------------  -------------------  --------------- 
 Balance at the beginning of the 
  financial period                            5,852,235                - 
  Bank finance drawn during the 
   financial period                          14,591,200        6,199,540 
  Interest during the financial 
   period                                     (523,219)                - 
  Borrowing costs                             (185,976)        (362,717) 
  Effective interest expense                    685,020           15,412 
----------------------------------  -------------------  --------------- 
 Balance at end of the financial 
  period                                     20,419,260        5,852,235 
 
  Maturity of borrowings is as 
   follows 
  Less than one year                             16,053           11,837 
  Between two and five years                 20,403,207        5,840,398 
----------------------------------  -------------------  --------------- 
 Total 
                                             20,419,260        5,852,235 
  Undrawn at end of the financial 
  period                                      8,283,260       13,754,460 
----------------------------------  -------------------  --------------- 
 

The first loan facility was drawn down in December 2018 and there were no loan repayments during the period to 31 December 2018. The second facility was arranged and partial drawn in July 2019. The facility was partially repaid later in the year. The total interest paid was EUR523,219. As at 31 December 2019 EUR8,283,260 (2018: EUR13,754,460) available within the facility, EUR20,790,740 (2018: EUR6,199,540) was drawn.

The Company stated in its Admission document its intention to target borrowings, following full investment of the net proceeds raised at Admission, of 25% loan-to-value ("LTV"). LTV is the ratio of drawn debt to the value of property investments, which at 31 December 2019 was 17.96% (2018: 7.96%). Under the Irish REIT rules the REIT's borrowings must not exceed 50% of the value of its assets.

Where debt is drawn to finance material refurbishments and developments on qualifying assets, the borrowing cost associated with this debt is capitalised. No amounts were capitalised during the financial period for this purpose. All costs related to finance arrangements are amortised using the effective interest rate.

All borrowings are denominated in Euro. All borrowings are subject to six months or less interest rate changes and contractual re-pricing rates. Post year end the company extended its facility please refer to note 30 for details

 
       21. Share Capital 
                                             31 December                 31 December 
                                                    2019                        2018 
 
 Shares in issue                             111,572,210                  75,000,000 
                              ==========================  ========================== 
 
                                                     EUR                         EUR 
 Issue for cash 2018                             750,000                     750,000 
 Issue for cash 2019                             365,722                           - 
                              --------------------------  -------------------------- 
 In issue 31 December 2019                     1,115,722                     750,000 
                              ==========================  ========================== 
 
 

The Group has a single class of ordinary shares of one cent each. 75 million authorised and issued shares were outstanding on 31 December 2018, following the additional issue of 36.5 million shares in the period there were 111.6 million authorised and issued shares at 31 December 2019. All issued shares are fully paid.

On 7 June 2018, the day before Admission, the Company had 2,500,000 shares in issue, all of which had been issued to Jonathan Laredo. On 8 June 2018 an additional 72,500,000 shares were issued at a price of EUR1.00 each, of which 29,596 were issued to Jonathan Laredo. On 8 June 2018 Jonathan Laredo subscribed EUR1.00 for each of the 2,500,000 shares he already held, and an additional EUR29,596 for the shares issued to him on that date, such that all the Company's shares were subscribed for at a price of EUR1.00 and the proceeds of share issuance were EUR75,000,000.

On 13 June 2019 the Company announced details of an issuance program of up to 100 million new shares in a number of tranches through a 12-month Share Issuance Programme. This issuance program was approved at an EGM of the Company on 11 July 2019. A Launch Announcement of 11 July 2019 included details of an initial placing, the result of which was subscription for 10.0 million shares at a price of EUR1.00 per share, raising gross proceeds of EUR10 million for the Company.

On 22 November 2019 the company announced a further Placing which was conducted by way of a bookbuild. The result of this placing was subscription for 26.6 million shares on 4 December 2019 at a price of EUR0.97 per share, raising gross proceeds of approximately EUR25.8 million for the Company.

The Company had 63,427,790 unissued shares remaining under its share issuance program at 31 December 2019. All authorised shares are issues at year end.

The Company's entire authorised share capital is EUR10,000,000 comprising 1,000,000,000 ordinary shares.

22. Reserve s

   a)   Group 
 
 
                                                                        Share based 
                                       Share premium       Retained        payments 
                                                 EUR       earnings             EUR 
                                                                EUR 
----------------------------------  ----------------  -------------  -------------- 
 At 1 January 2019                         4,000,000     70,383,180               - 
  Shares issued in the period             35,409,322              -               - 
  Issue costs                                      -    (1,026,614)               - 
  Share based payment (Note 25)                    -              -         125,222 
  Profit for the financial period                  -      5,059,209               - 
  Dividend paid (Note 23)                          -    (5,143,500)               - 
----------------------------------  ----------------  -------------  -------------- 
 As at 31 December 2019                   39,409,322     69,272,275         125,222 
----------------------------------  ----------------  -------------  -------------- 
 
 
                                                                      Share based 
                                       Share premium       Retained      payments 
                                                 EUR       earnings           EUR 
                                                                EUR 
----------------------------------  ----------------  -------------  ------------ 
 Shares issued in the period              74,250,000              -             - 
  Issue costs                                      -    (2,200,699)             - 
  Transfer to retained earnings         (70,250,000)     70,250,000             - 
  Profit for the financial period                  -      2,333,879             - 
----------------------------------  ----------------  -------------  ------------ 
 As at 31 December 2018                    4,000,000     70,383,180             - 
----------------------------------  ----------------  -------------  ------------ 
 
   b)   Company 
 
 
                                                                        Share based 
                                       Share premium       Retained        payments 
                                                 EUR       earnings             EUR 
                                                                EUR 
----------------------------------  ----------------  -------------  -------------- 
 At 1 January 2019                         4,000,000     70,151,672               - 
  Shares issued in the period             35,409,322              -               - 
  Issue costs                                      -    (1,026,614)               - 
  Share based payments (Note 25)                   -              -         125,222 
  Profit for the financial period                  -      5,033,567               - 
  Dividend paid (Note 23)                          -    (5,143,500)               - 
----------------------------------  ----------------  -------------  -------------- 
 As at 31 December 2019                   39,409,322     69,015,125         125,222 
----------------------------------  ----------------  -------------  -------------- 
 
 
 
                                                                         Share based 
                                       Share premium        Retained        payments 
                                                 EUR        earnings             EUR 
                                                                 EUR 
----------------------------------  ----------------  --------------  -------------- 
 Shares issued in the period              74,250,000               -               - 
  Issue costs                                      -     (2,200,699)               - 
  Transfer to retained earnings         (70,250,000)      70,250,000               - 
  Profit for the financial period                  -       2,102,371               - 
----------------------------------  ----------------  --------------  -------------- 
 As at 31 December 2018                    4,000,000      70,151,672               - 
----------------------------------  ----------------  --------------  -------------- 
 

The equity of the Company consists of Ordinary Shares issued. The par value of each share is recorded in the share capital account. The excess of proceeds received over the par value is recorded in the share premium account. Direct issue costs in respect of the issue of shares are accounted for in the retained earnings reserve, net of any related tax deduction.

On 1 November 2018 the High Court of Ireland made an Order confirming the Company's capital reduction resolution for the reduction of the Company's Share Premium Account in the sum of EUR70,250,000 such that the balance remaining credited to that account will be EUR4,000,000 such that the reserve resulting from such cancellation be treated as realised profits as defined by Section 117 of the Companies Act 2014. The Order of Court and Minute on reduction of share premium account was registered with the Companies Registration Office on the 2 November 2018.

23. Distributions made and declared

 
 Cash dividends to the equity holders    31 December   5 April 2018 
  of the Company:                               2019             to 
                                                 EUR    31 December 
                                                               2018 
                                                                EUR 
--------------------------------------  ------------  ------------- 
 Dividends on ordinary shares declared 
  and paid 
 Final dividend for 2018: 0.96 cent          723,000              - 
  per share 
 Interim dividend for Q1 2019: 1.10          825,000              - 
  cent per share 
  Interim dividend for Q2 2019: 1.37       1,027,500              - 
   cent per share 
  Special dividend* Q2 2019: 1.86 cent     1,395,000              - 
   per share 
  Interim dividend for Q3 2019: 1.38       1,173,000 
   cent per share 
 
 Total                                     5,143,500              - 
--------------------------------------  ------------  ------------- 
 
 
 Declared dividend on ordinary shares 
 Proposed Interim dividend for Q4 2019:   1,160,350   - 
  1.04 cent per share 
---------------------------------------  ---------- 
 

*The declared Q2 interim dividend on ordinary shares was declared on 26 June 2019 and paid to equity holders on 24 July 2019. This dividend was inclusive of a special dividend of 1.86 cent per share following the receipt of a lease surrender during the period.

The Dividend for the year resulted in a full year dividend amount of 6.75 cent per share (7.08 cent per share undiluted) Proposed dividend had not been accounted for as a liability at year end. The board approved the dividend on 13 February 2020 and it was paid on 19 March 2020.

24. Related party transactions

The Directors are considered to be related parties.

On Admission to the AIM and the Euronext Growth market the Executive Directors subscribed for shares in the Company at the issued price. They subscribed their post-tax proceeds from redemption of shares in the Yew Tree Investment Fund (in Members Voluntary Liquidation) and their shares of all incentive fees due from Parapet Capital Advisors' role as Investment Adviser to the AIFM of the Yew Tree Investment Fund (in Members Voluntary Liquidation). Concurrently the Non-executive Directors subscribed for shares in the Company at the issued price.

The Directors made further subscriptions for shares at the issued price in the July and December share placings. The interest of the Directors in the share capital of the Group as at 31 December 2019 is as follows in 2019:

 
     Director       No. of Ordinary Shares   % of issued share 
                                                  capital 
 Michael Gibbons                 2,052,544               1.84% 
                   -----------------------  ------------------ 
 Charles Peach                     277,213               0.25% 
                   -----------------------  ------------------ 
 Jonathan Laredo                 2,575,396               2.31% 
                   -----------------------  ------------------ 
 Barry O'Dowd                       50,309               0.05% 
                   -----------------------  ------------------ 
 Garry O'Dea                        75,773               0.07% 
                   -----------------------  ------------------ 
 Eimear Moloney                     70,773               0.06% 
                   -----------------------  ------------------ 
 Brian Owens                        70,773               0.06% 
                   -----------------------  ------------------ 
 

The Directors of the Group received remuneration, fees and other benefits from the Group for their services. Total amounts for the financial period were EUR1,358,154. No remuneration, fees or other benefits were paid to the Directors by any subsidiary or joint venture.

All transactions between the Company and its subsidiaries are eliminated on consolidation.

Key management personnel

The remuneration of the key management personnel during the financial period is disclosed in note 25 below.

Subsidiaries, Associates and joint ventures

All transactions between the Company and its subsidiaries are eliminated on consolidation.

The following lists the subsidiaries of the Group:

 
 Name of subsidiary      Registered Address/Country   Nature of       Membership   Votes controlled 
                          of Incorporation             the business                 by the Company 
 Gateway Estate          2(nd) Floor, River           Management      2/3          99% of voting 
  Management Company      House, East Wall             of common                    rights 
  Limited by Guarantee    Road, Dublin 3,              areas 
                          Ireland 
                        ---------------------------  --------------  -----------  ----------------- 
 Mallow Business         Mallow Business              Management      1/2          50% of voting 
  Park Management         Park, Gooldhill,             of common                    rights 
  Company Limited         Mallow, Co. Cork             areas 
  by Guarantee 
                        ---------------------------  --------------  -----------  ----------------- 
 

The following lists the joint ventures of the Group:

 
 Name of joint venture    Registered Address/Country     Nature of        Votes controlled 
                           of Incorporation               the business     by the Company 
 Ashtown Management       Friends First House,           Management 
  Company Limited          Cherrywood, Loughlinstown,     of common 
  by Guarantee             Co.Dublin, Ireland             areas           50% 
                         -----------------------------  ---------------  ----------------- 
 

The joint venture had a break even result for the period to 31 December 2019.

Other related parties.

No other related party transactions have been identified.

25. Directors' remuneration

 
 
                                                                   5 April 2018 
                                                    31 December              to 
                                                           2019     31 December 
                                                            EUR           2 018 
                                                                            EUR 
------------------------------------------------  -------------  -------------- 
 Remuneration - Independent Non-executive 
  Directors                                             230,000         129,169 
  Remuneration - Executive Directors                    375,012         210,426 
  Total Directors and Non-executive Directors 
   remuneration 
  Bonus accrual                                         605,012         339,595 
  Pension defined contribution plan - Executive 
   Directors                                            615,000               - 
  Other benefits Health insurance - Executive 
   Directors                                            113,242          63,126 
                                                         24,900          12,086 
------------------------------------------------  -------------  -------------- 
 Total                                                1,358,154         414,807 
------------------------------------------------  -------------  -------------- 
 
 

The remuneration of Directors and key management is determined by the Remuneration Committee to reflect the performance of individuals and market trends. Other benefits paid to the three Executive Directors during the period includes health insurance, death in service and illness combined insurance. Defined contribution pension payments represent contributions on behalf of the three Executive Directors. All fees paid to Non-Executive Directors are for services as Directors to the Group, they receive no other benefits. There were no payments of compensation made to Directors for termination or loss of office.

Share based payments

In February 2019, the Remuneration Committee granted 1,125,000 share options to senior executives under the Long-Term Incentive Plan ("LTIP"). The exercise price of the options of EUR0.01 is equal to the nominal price of the shares on the date of grant. The options vest (30% if at lowest hurdle, 100% if at or above highest hurdle) if the Company's Net Asset Value ("NAV") growth is 10% - 20%, Dividend per Share is EUR0.06 - EUR0.075 per share and Total Shareholder Return ("TSR") is 10% - 15%.

Vesting is three years from the date of grant and requires the senior executive to still be employed by the Company on such date. If the lower hurdles are not met, the options lapse. The vested options must be exercised within 2 years of vesting. The fair value at grant date is estimated using a Monte Carlo simulation pricing model, taking into account the terms and conditions upon which the options were granted. There is no cash settlement of the options. The fair value of options granted during the period to 31 December 2019 was estimated on the date of grant using the following assumptions:

Dividend yield (%) 6.14

Expected volatility (%) 17.94

Risk-free interest rate (%) 1

Vesting period of share options (years) 2.87

Grant date share price (EUR) 0.98

While the TSR linked option values calculated are based on market based assumptions, the NAV and dividend per share linked options, being non-market based, required management assumptions as to the probability of their respective hurdles being achieved.

For the year ended 31 December 2019, the Group has recognised EUR125,222 of share-based payment expense in the Consolidated Statement of Comprehensive Income.

26. Acquisition of subsidiaries

Yew Tree Investment Fund plc (in Member's Voluntary Liquidation)

On 8 June 2018 the Company acquired 100% of the class B ordinary share capital of the Yew Tree Investment Fund (in Members Voluntary Liquidation) for cash consideration of EUR23,064,484. The AIFM of the Yew Tree Investment Fund (in Members Voluntary Liquidation) had previously been advised by the Executive Directors, and details of the Fund and its assets were included in the Company's Admission document. Goodwill arising on the acquisition of the Yew Tree Investment Fund (in Members Voluntary Liquidation) was been capitalised and assessed for impairment at the prior period end date.

Analysis of acquisition of the Yew Tree Investment Fund (In Member's Voluntary Liquidation)

Upon acquisition of a subsidiary, fair values are attributed to the identifiable net assets acquired. The amount s recognised in respect of the identifiable assets acquired and liabilities assumed in the prior period are set out in the table below.

 
                                              Book value                      Fair value 
  Net assets at the date of                  at the date    Fair value       at the date 
   acquisition                            of acquisition    adjustment    of acquisition 
                                                     EUR           EUR               EUR 
  Investment properties                       25,910,000             -        25,910,000 
  Trade receivables and prepayments              513,727     (238,750)           274,977 
  Cash and cash equivalents                    5,781,977             -         5,781,977 
                                        ----------------  ------------  ---------------- 
                                              32,205,704     (238,750)        31,966,954 
  Trade payables and accruals                  (811,798)             -         (811,798) 
  Loan                                       (8,329,422)             -       (8,329,422) 
                                        ----------------  ------------  ---------------- 
                                              23,064,484     (238,750)        22,825,734 
 
  Share of net asset acquired 
   (100%)                                                                     22,825,734 
  Cash consideration                                                          23,064,484 
                                                                        ---------------- 
  Goodwill arising on acquisition                                                238,750 
 
 
 

On 8 June 2018 the Company subscribed for 23,064,484 of the EUR1 B ordinary share capital in Yew Tree Investment Fund (in Members Voluntary Liquidation) for EUR23,064,484 as consideration for the Fund's net assets.

The fair value of unamortised loan facility costs with a book value of EUR238,750 included trade receivables was estimated to have a fair value of EURnil at the acquisition date.

No deferred tax arose from this acquisition.

On 27 July 2018, the Yew Tree Investment Fund was placed into Members Voluntary Liquidation, from which date the Yew Tree Investment Fund is no longer consolidated in the Group's financial statements.

Subsequent to the appointment of the liquidator on 27 July 2018 and prior to 31 December 2018, Yew Tree Investment Fund's properties of EUR25.9m and cash of EUR5.3m had been distributed in specie to Yew Grove REIT plc as the 100% owner of the B ordinary shares. A distribution of EUR34,500 was made during the year. A further distribution is expected to be made on finalisation of the liquidation in 2020.

At the Statement of Financial Position date the Yew Tree Investment Fund (in Members Voluntary Liquidation) was still under the Member's Voluntary Liquidation process.

Gateway Estate Management Company Limited by Guarantee

On 2 July 2018 the Group acquired 99% of the voting rights of Gateway Estate Management Company Limited by Guarantee for nil consideration following the acquisition of One and Three Gateway, East Wall Road, Dublin 3. Negative goodwill arising on the acquisition of Gateway Estate Management Company Limited by Guarantee has been taken directly to the Statement of Comprehensive Income during the period. The investment in Gateway Estate Management Company Limited by Guarantee has been included in the Group's balance sheet at its fair value.

Analysis of acquisition of Gateway Estate Management Company Limited by Guarantee

Upon acquisition of a subsidiary, fair values are attributed to the identifiable net assets acquired. The amount s recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below.

 
                                                   Book value        Fair value 
                                                  at the date       at the date 
  Net assets at the date of acquisition        of acquisition    of acquisition 
                                                          EUR               EUR 
  Trade receivables and prepayments                   142,621           142,621 
  Cash and cash equivalents                            91,161            91,161 
                                             ----------------  ---------------- 
                                                      233,782           233,782 
  Trade payables and accruals                       (175,043)         (175,043) 
                                             ----------------  ---------------- 
                                                       58,739            58,739 
 
  Share of net asset acquired (100%)                                     58,739 
  Consideration                                                               - 
                                                               ---------------- 
  Negative goodwill arising on acquisition                             (58,739) 
 

Negative goodwill arising on the acquisition of Gateway Estate Management Company Limited by Guarantee has been taken directly to the Statement of Comprehensive Income during the prior period.

27. Operating lease receivables

Future aggregate minimum rental receivables (to the next break date) under non-cancellable operating leases and licences are:

 
 
                                                          5 April 2018 
                                          31 December               to 
                                                 2019      31 December 
                                                  EUR            2 018 
                                                                   EUR 
-------------------------------------  --------------  --------------- 
 Operating lease rentals and licence 
  income receivables due in: 
  Less than one year                        8,778,209        6,283,984 
  Between two and five years               20,983,091       16,679,791 
  Greater that five years                   9,943,038        7,918,572 
-------------------------------------  --------------  --------------- 
 Total                                     39,704,338       30,882,347 
-------------------------------------  --------------  --------------- 
 

The Group has both operating leases and operating licences. The operating licences are predominantly for car parking spaces and are less than one year in duration.

The Group leases its investment properties under operating leases. The weighted average unexpired lease term of these leases ("WAULT") at 31 December 2019 is 8.1 years to expiry (2018: 7.4 years).

These calculations are based on all lease and licences outstanding at 31 December 2019.

The Company shares weekly reports which includes details of the next lease events for all its leases . Following distribution of this report the company holds a weekly meeting at which each property, and the strategy for impending or future lease amendments is discussed. The principal strategies for managing risk of its leases are: monitoring the creditworthiness and business models of existing tenants and their guarantors, arranging new leases with existing or new tenants, effecting rent reviews and lease amendments with existing tenants.

28. Financial instruments - risk management and fair value

Financial assets and financial liabilities

The following table shows the Group's financial assets and liabilities and the methods used to calculate fair value.

 
 
 
         ASSET/           CARRYING      CARRYING     LEVEL           VALUATION TECHNIQUE 
       LIABILITY            VALUE        VALUE 
---------------------  ------------  -----------  --------  ---------------------------------- 
                                                             All trade and other receivables 
                                                              that could be classified 
                                                              as financial instruments 
                                                              are short-term, the majority 
                                                              being less than three months 
                                                              in duration, and therefore 
                                                              face value approximates fair 
                                                              value on an amortised costs 
 Trade and              Amortised                             basis using the effective 
  other receivables      cost          960,819        3       interest rate method. 
---------------------  ------------  -----------  --------  ---------------------------------- 
                                                             The carrying amount of loans 
                                                              and borrowings held at amortised 
                                                              cost have been calculated 
                                                              by discounting the expected 
 Loans and              Amortised                             cashflows at prevailing interest 
  borrowings             cost         20,419,260      3       rates. 
---------------------  ------------  -----------  --------  ---------------------------------- 
                                                             All trade and other payables 
                                                              that could be classified 
                                                              as financial instruments 
                                                              are short-term, the majority 
                                                              being less than one month 
                                                              in duration, and therefore 
                                                              face value approximates fair 
                                                              value on an amortised cost 
 Trade and             Amortised                              basis using the effective 
  other payables        cost          3,061,571       3       interest rate method. 
--------------------  -------------  -----------  --------  ---------------------------------- 
 
 

The Board has overall responsibility for the establishment and oversight of the Group's risk management framework. The Audit Committee is responsible for developing and monitoring the Group's risk management policies. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. All of these policies are regularly reviewed in order to reflect changes in the market conditions and the Group's activities.

The main risks arising from the Group's financial instruments are market risk, credit risk and liquidity risk. The policies for managing each of these and the principal effects of these policies on the results for the financial period are summarised below:

   i.    Market risk 

Market risk is the risk that the fair value or cashflows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects interest rate risk, currency risk and other price risks. The Group's financial assets mainly comprise of investment properties, and trade and other receivables and cash which are classified as financial assets. The Group has no financial assets or liabilities denominated in foreign currencies. Financial liabilities comprise short-term payables and bank borrowings. All of these items are denominated in Euro. The Group's primary market risk for financial instruments is interest rate risk.

   a)    Interest rate risk 

Bank borrowing interest rates are based on short-term variable interest rates which the Group has chosen not to hedge. Exposure to interest rates is limited to the exposure of its earnings from uninvested funds and borrowings. The Group has a revolving credit facility with AIB of EUR29.1m (2018: EUR19.9m), of which EUR8.3m was undrawn as at 31 December 2019 (2018: EUR13.7) Interest due on the drawn amount of the facility will vary with changes in the underlying interest rate which may result in an increase in financing costs. The Group's drawings under its bank facility float at a margin over the higher of 3 months Euribor or 0% at drawing and quarterly reset dates and therefore the impact of a rise in 3 months Euribor to 1% for a full year on drawings

as at 31 December 2019 would be approximately EUR0.21m (2018: EUR0.06m), and if the facility were fully drawn would be EUR0.30m (2018: EUR0.20m).

The Group is also exposed to interest rate risk on its cash and cash equivalents. There were EUR14.38m uninvested Group funds held within Bank of Ireland, Allied Irish Bank and Societe Generale accounts at 31 December 2019 (2018: EUR4.36). These balances attract low interest rates and therefore a relative increase or decrease in their interest rates would not have a material effect on the Consolidated Statement of Comprehensive Income.

   b)    Currency risk 

The Company has a sterling bank account with Societe Generale. As at 31 December 2018 the amount outstanding was GBP6,202 (2018: GBP18,168). This amount is judged sufficient to settle expected sterling payments due to service providers. As such, the Company had minimal foreign exchange exposure.

   ii.   Liquidity risk 

Liquidity risk is the risk the Group may encounter difficulties in meeting the obligations associated with its financial liabilities settled by cash or other financial assets. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Group monitors the level of expected cash inflows on trade and other receivables, together with expected cash outflows on trade and other payables and capital commitments.

Detailed below are the contractual maturities of the Group's financial liabilities;

 
 2019:               Carrying     6 months     6 to         1 to       2 to 5       More       Total contractual 
                      Value        or less      12 months    2 years    years        than       amount 
                                                                                     5 years 
------------------  -----------  -----------  -----------  ---------  -----------  ---------  ------------------ 
 Borrowings          20,419,260      297,440      297,440    594,879   20,419,260          -          21,609,018 
  Trade and 
   other payables     3,561,604    3,344,401      201,150          -            -          -           3,545,551 
------------------  -----------  -----------  -----------  ---------  -----------  ---------  ------------------ 
 Total carrying 
  amount             23,980,864    3,641,841      498,590    594,879   20,419,260          -          25,154,569 
------------------  -----------  -----------  -----------  ---------  -----------  ---------  ------------------ 
 
 
 2018:              Carrying    6 months    6 to         1 to       2 to 5    More      Total contractual 
                     Value       or less     12 months    2 years    years     than      amount 
                                                                               5 years 
-----------------  ----------  ----------  -----------  ---------  --------- 
Borrowings          5,840,398     159,101      159,100    319,703  6,508,152         -          7,146,056 
 Trade and 
  other payables    1,930,902   1,930,902            -          -          -         -          1,930,902 
Total carrying 
 amount             7,771,300   2,090,003      159,100    319,703  6,508,152         -          9,076,958 
 

iii. Credit risk

Cash and cash equivalents : cash and cash equivalents are held with major Irish and European banking institutions. These banking institutions and their short term ratings are listed below (ratings for each are from Standard and Poors/Moody's/Fitch):

Societe Generale S.A. has short term unsecured debt ratings of A-1/P-1/F1

Allied Irish Bank plc has short term unsecured debt ratings of A-2/P-1/F2

The Governor and Company of the Bank of Ireland has short term ratings of A-2/P-1/F2

Trade and other receivables: rents and licences are generally received monthly in advance or quarterly in advance from tenants. The balance of trade and other receivables has no concentration of credit risk as it comprises mainly prepayments.

The Group's exposure to credit risk is influenced mainly by the individual characteristics of its customers. Trade and other receivables relate mainly to the Group's property tenants. The day-to-day management of the Group's customers is managed by appointed property agents under the oversight of the Group's internal property management group.

The Group applies the simplified approach to trade receivables for which expected credit losses uses the lifetime expected credit allowance. The Group has no exposure to bad debts as the majority of the Group's rental income is from State bodies or FDI entities as they have good credit standing. The payment and credit performance of these tenants is closely monitored; therefore, the expected credit loss is not material and has not been presented .

There was no credit loss in the year as a result of the Directors' assessment.

Detailed below are the carrying amount of the Group's financial assets as the maximum amount of exposure to credit risk;

 
 
                                                5 April 2018 
                                31 December               to 
                                       2019      31 December 
                                        EUR            2 018 
                                                         EUR 
                                             --------------- 
Trade and other receivables       3,477,065          565,100 
 Cash and cash equivalents       14,577,461        4,823,734 
                                             --------------- 
 Balance at end of period        18,054,526        5,388,834 
----------------------------                 --------------- 
 

Capital management

The Group's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain the future development of the business. The key performance indicators used in evaluating the achievement of strategic objectives are return on capital, growth in NAV and dividends to ordinary shareholders (dividend per share) as well as the total return of the Group's property portfolio.

Capital consists of share capital, reserves and retained earnings. At 31 December 2019 the equity of the Group was EUR109.92m (2018: EUR75.13m).

The Group seeks to leverage capital in order to enhance returns. Refer to note 20 for more details.

The Group's share capital is publicly traded on the Euronext Growth market of Euronext Dublin and the Alternative Investment Market of the London Stock Exchange.

29. Contingent Liabilities

The Group has not identified any contingent liabilities which are required to be disclosed in the Consolidated financial statements.

30. Events after the reporting period

On 23 January 2020 the Company appointed Liberum Capital Limited as joint corporate broker and Nominated Adviser. Goodbody Stockbrokers UC continues as joint corporate broker and has been appointed as Euronext Growth Adviser.

On 31 January 2020 the Company agreed a EUR9.9 million increase to its three year floating rate loan facility with Allied Irish Banks, p.l.c. ("AIB") bringing the total Facility to EUR39.0 million. The Facility is in place until December 2021, secured on certain of Yew Grove's properties, and interest is charged on a margin over three month Euribor.

On 06 February 2020 the Company completed the acquisition of a portfolio of six office buildings at Millennium Park, Naas, County Kildare (the "Portfolio"). The purchase price for the Portfolio was EUR25.3 million which represents a net initial yield of 5.8 per cent. after accounting for purchase costs. The Portfolio has reversionary potential expected to yield in excess of 9 per cent. The Portfolio has 141,000 sq. ft. of modern offices over six buildings, as well as 773 carparking spaces and a six-acre greenfield site. Five of the office buildings are tenanted by foreign direct investment ("FDI") and large Irish enterprises, with one of the buildings being vacant. The combined leases have a weighted average unexpired lease term (WAULT) to break of approximately 2.5 years and to lease expiry of approximately 5 years. The current annual rent roll for the Portfolio is approximately EUR1.6 million.

On 13 February 2020 the Company declared the payment of an interim dividend for the fourth quarter in respect of the period ended 31 December 2019 of EUR1,160,350 for 1.04 cents per ordinary share. This will be paid to shareholders on 19 March 2020.

On 3 March 2020 the Company agreed a EUR10.1 million increase to its three year floating rate loan facility with Allied Irish Banks, p.l.c. ("AIB") bringing the total Facility to EUR49.1 million. The Facility is in place until December 2021, secured on certain of Yew Grove's properties, and interest is charged on a margin over three month Euribor.

31. Capital commitments

At the Statement of Financial Position, the Group has entered contracts for future capital expenditure of amounting to EUR268,163. There is a commitment of EUR120,000 for works at Ashtown Gate for improvements to the estate, the amount is half the full capital expenditure required as this relates to the joint venture, the full amount is recoverable from tenants under the lease agreements over the next three years. Works at Letterkenny have also been committed to with an expected cost of EUR48,163. It is also expected that a car park is built at the Waterford property with an estimated cost of EUR100,000, this commitment was taken on as part of the purchase of the property in 2019 and was due to be completed by December 2019, an extension was requested in respect of the development of the car park to 2020.

There are no other capital commitments at the Statement of Financial Position date.

Alternative performance measures

The Group has applied the European Securities and Markets Authority (ESMA) 'Guidelines on Alternative Performance Measures' in this Annual Report and Consolidated financial statements. An alternative performance measure ("APM") is a measure of financial or future performance, position or cashflows of the Group which is not a measure defined by International Financial Reporting Standards ("IFRS").

The following are the APMs used in this report together with information on their calculation and relevance.

 
APM                IFRS measure         Note      Description 
                    for reconciliation 
Contracted rent    NA                            Annualised cash 
 roll                                             rental income 
                                                  (net of car park 
                                                  licence income) 
                                                  being received 
                                                  as at the stated 
                                                  date 
EPRA Earnings      IFRS EPS             Note 12  Earnings from 
 per share                                        core operational 
                                                  activities. A 
                                                  key measure of 
                                                  a company's underlying 
                                                  operating results 
                                                  from its property 
                                                  rental business 
                                                  and an indication 
                                                  of the extent 
                                                  to which current 
                                                  dividend payments 
                                                  are supported 
                                                  by earnings 
EPRA NAV           IFRS NAV             Note 13  The objective 
                                                  of the EPRA NAV 
                                                  measure is to 
                                                  illustrate the 
                                                  fair value of 
                                                  net assets on 
                                                  an ongoing, long-term 
                                                  basis. Assets 
                                                  and liabilities 
                                                  that are not 
                                                  expected to crystallise 
                                                  in normal circumstances 
                                                  (e.g. the fair 
                                                  value of financial 
                                                  derivatives, 
                                                  deferred taxes 
                                                  on property valuation 
                                                  surpluses) are 
                                                  excluded 
EPRA NAV per       IFRS NAV per         Note 13  EPRA NAV calculated 
 share              share                         on a diluted 
                                                  basis taking 
                                                  into account 
                                                  the impact of 
                                                  any options, 
                                                  convertibles, 
                                                  etc. that are 
                                                  dilutive. 
Loan to Value      NA                            Outstanding drawings 
                                                  under loan facilities 
                                                  as a percentage 
                                                  of the fair value 
                                                  of the investment 
                                                  properties 
Total Debt to      NA                            Outstanding drawings 
 Equity Gearing                                   under loan facilities 
                                                  as a percentage 
                                                  of the IFRS nett 
                                                  asset value of 
                                                  the Group 
Total Shareholder  NA                            A measurement 
 Return                                           of the growth 
                                                  in share value 
                                                  for shareholders 
                                                  (assuming gross 
                                                  dividends are 
                                                  reinvested and 
                                                  share appreciation) 
                                                  over a defined 
                                                  period. 
 

GLOSSARY

CBD: The central business district of a city.

Contracted rent roll : The annualised cash rental income (including car park licence income) being received as at the stated date.

Debt to Equity gearing: The ratio calculated by dividing the amount of drawn loans by the Net Asset Value of the Group.

Dublin Catchment Area: The geographic area within an approximately thirty-minute commute of the M50 motorway.

EPRA: The European Public Real Estate Association.

EPRA EPS : is calculated by dividing EPRA Earnings for the reporting period attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the reporting period. EPRA Earnings measures the level of income arising from operational activities. It is intended to provide an indicator of the underlying income generated from leasing and management of the property portfolio and so excludes components not relevant to the underlying net income performance of the portfolio such as unrealised changes in valuation and any gains or losses on disposals of properties.

EPRA NAV: A measures of the fair value of net assets on an ongoing, long-term basis in accordance with guidelines issued by the EPRA while taking into account the dilutive effects of any outstanding options, convertibles, or other financial instruments. The EPRA NAV excludes the net mark-to market value of financial instruments used for hedging purposes where a company has the intention to keep the hedge position until the end of the contractual duration, and deferred tax in respect of any difference between the fair value and the book value of the investment properties.

ERV/ Estimated Rental Value: A valuer's opinion as to the open market rental value of a property on a valuation date which could reasonably be expected to be the achievable rent for a new letting of that property on the valuation date. Colloquially referred to as market rent.

Foreign Direct Investment companies ("FDI"): Overseas companies that have established operations in Ireland, often with the assistance of IDA Ireland.

Gross reversionary yield: The reversionary rent roll of a property or group of properties as a percentage of their fair value.

Gross yield at fair value: A calculation of the current expected cash rental return, being the contracted rent roll divided by the fair value of the investment property or properties.

Loan to Value/LTV : The LTV is calculated by dividing the amount of drawn loans by the fair value of the Company's investment properties.

Net Initial Yield ("NIY"): Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, increased with (estimated) purchasers' costs.

Net valuation gain: The fair value gain over the period (from the shorter of the time to the last valuation or purchase). Purchases made since the last valuation are initially recognised at price including transaction costs.

Next rent reversion date: The earliest following date at which the Company could be expected to choose to re-let a property at the property's ERV.

Property income: As defined in section 705A of the Taxes Consolidation Act, 1997. It means, in relation to a company or group, the Property Profits of the company or group, as the case may be, calculated using accounting principles, as: (a) reduced by the Property Net Gains of the company or group, as the case may be, where Property Net Gains arise, or (b) increased by the Property Net Losses of the company or group, as the case may be, where Property Net Losses arise.

Property Net Losses: As defined in section 705A of the Taxes Consolidation Act, 1997.

Property Net Gains: As defined in section 705A of the Taxes Consolidation Act, 1997.

Property Profits: As defined in section 705A of the Taxes Consolidation Act, 1997.

Property Rental Business : As defined in section 705A of the Taxes Consolidation Act, 1997.

QIAIF: A Qualifying Investor Alternative Investment Fund.

Rent review: A clause often included in property leases that provides for a periodic adjustment of the rent of a property to the market level of rent.

Reversion: A term used to describe the difference in rent from that which is currently due on outstanding leases and the ERV. Under-rented properties have contracted rents lower than ERV, over-rented properties have contracted rents higher than ERV.

Reversionary rent roll: The annualised cash rental income (net of car park licence income) that would be received if the property or properties were leased at ERV.

Seed portfolio : The portfolio of investment properties owned by the Yew Tree Investment Fund (in Members Voluntary Liquidation) when it was purchased on 8 June 2018.

SME : As defined by Enterprise Ireland, an enterprise that has between 50 employees and 249 employees and has either an annual turnover not exceeding EUR50m or an annual balance sheet total not exceeding EUR43m.

State Body: a body established by legislation in the Republic of Ireland which is either entirely or majority owned by the Irish Government

Total debt to equity gearing: The ratio of drawn debt to NAV of the Company.

Total expense ratio ("TER"): The ratio of the Company's annualised expenses, excluding transaction costs, financing costs and capital expenses as a percentage of the average net assets during that period.

Total shareholder return: The growth in share value over a period assuming all dividends are reinvested in shares of the Company when paid.

Vacancy: Lettable space owned by the Company which is not let or licenced to a tenant.

WAULT: Weighted average unexpired lease term

Corporate Information

 
     Directors          Barry O'Dowd (Chair, Independent Non-executive 
                         Director) 
                         Eimear Moloney (Independent Non-executive 
                         Director) 
                         Garry O'Dea (Independent Non-executive 
                         Director) 
                         Brian Owens (Independent Non-executive 
                         Director) 
                         Jonathan Laredo (Chief Executive Officer) 
                         Charles Peach (Chief Financial Officer) 
                         Michael Gibbons (Chief Investment Officer) 
Registered office       4th Floor 
                         76 Lower Baggot Street 
                         Dublin 2, Ireland 
Company Secretary       Sanne Corporate Administration Services 
                         Ireland Limited 
                         4th Floor 
                         76 Lower Baggot Street 
                         Dublin 2, Ireland 
AIFM                    Ballybunion Capital Limited 
                         Ashley House 
                         Morehampton Road 
                         Dublin 4, Ireland 
Euronext Growth         Goodbody Stockbrokers 
Adviser and Joint        Ballsbridge Park 
Broker                   Ballsbridge 
                         Dublin 4, Ireland 
Nominated Adviser       Liberum Capital Limited 
 and Joint Broker        Ropemaker Place, 
                         25 Ropemaker Street, 
                         London EC2Y 9LY 
Legal Adviser           William Fry 
 to the Company          Grand Canal Square 
 as to Irish law         Grand Canal Dock 
                         Dublin 2, Ireland 
Registrar               Link Asset Services 
                         Link Registrars Limited 
                         2 Grand Canal Square 
                         Dublin 2, Ireland 
 
  Depositary and          Société Générale 
  Custodian               S.A., Dublin Branch 
                          3rd Floor, IFSC House 
                          IFSC 
                          Dublin 1, Ireland 
Valuer                  Lisney Limited 
                         St. Stephen's Green House 
                         Dublin 2, Ireland 
 
Auditor                 Deloitte Ireland LLP 
                         Chartered Accountants and Statutory Audit 
                         Firm 
                         Deloitte & Touche House 
                         29 Earlsfort Terrace 
                         Dublin 2, Ireland 
 
 
 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR EAFDNEEAEEAA

(END) Dow Jones Newswires

March 10, 2020 03:00 ET (07:00 GMT)

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