TIDMEBOX TIDMBOXE
RNS Number : 7544U
Tritax EuroBox PLC
07 December 2021
07 December 2021
Tritax EuroBox plc
(the "Company")
RESULTS FOR THE 12 MONTHSED 30 SEPTEMBER 2021
Tritax EuroBox plc (ticker: EBOX (Sterling) and BOXE (Euro)),
which invests in a high-quality portfolio of large, prime logistics
real estate assets strategically located across Continental Europe,
is today reporting its results for the 12 months ended 30 September
2021.
Financial performance
30 September 30 September Increase/
2021 2020 (decrease)
Portfolio value(1) EUR1,281.4m EUR837.9m 52.9%
IFRS NAV per share(2) EUR1.31 EUR1.19 10.1%
EPRA Net Tangible Assets
per share(2) EUR1.35 EUR1.22 10.7%
Dividend per share 5.00 cents 4.40 cents
Total Return(3) 14.3% 11.0%
Profit before tax EUR129.00m EUR53.58m
Basic Earnings Per Share
("EPS")(4) 19.59 cents 10.60 cents
Adjusted EPS(4) 4.61 cents 4.16 cents
EPRA Cost Ratio 30.5% 31.3% (0.8) pts
(27.8)
Loan to value ("LTV") ratio 13.3% 41.1% pts
Financial highlights: continued strong performance and dividend
growth
-- Dividends declared in respect of the year of 5.0 cents per
share, up 13.6% (2020: 4.40 cents), contributing to Total Return of
14.3% (2020: 11.0%)
-- Raised gross proceeds of EUR480 million through two
oversubscribed equity issues in March and September 2021
-- Awarded a BBB- investment grade credit rating in March 2021,
immediately reducing our cost of debt and opening up new sources of
debt financing
-- Issued a EUR500m senior unsecured green bond in June 2021,
significantly lowering the cost of debt and diversifying our
funding sources into the debt capital markets
-- Portfolio independently valued at EUR1,282.6(7) million at
the year end (30 September 2020: EUR839.3 million), a like-for-like
increase of 11.9%
-- 100% of rent due for the year collected, along with all rent
deferred from 2019/20, resulting in full rent collection over the
last two financial years
Operational highlights: successful implementation of our
strategy
-- Acquired prime logistics assets in Belgium, Germany (two
assets) and Sweden, and forward funded the acquisition of a prime
asset in Italy
-- Continued to extract value from the portfolio, including:
o Disposing of the asset at Lodz, Poland, for EUR65.5 million,
15% above valuation and delivering an IRR of 16.5%
o Launching construction of the extension to the Barcelona asset
let to Mango, and achieving practical completion of new building at
the Bornem asset in Belgium
o Signed a green lease with Samsung on the vacant units at
Breda, the Netherlands, and let the vacant unit at Strykow,
Poland
-- Continued successful implementation of our environment,
social and governance (ESG) strategy, including introducing ESG
acquisition due diligence reports, implementing green leases and a
range of initiatives to improve environmental performance,
including progressing solar PV installations, resulting in an
improved GRESB score of 82/100
-- At the year end, the portfolio comprised:
o 15 assets in prime locations, with an average size of 70,027
sqm
o A strong, well-diversified base of 27 tenant partners, 76%(5)
of our income is underpinned by multi-billion Euro turnover
businesses
o 100% of assets are income producing(6) and 95% of rental
income is subject to an element of indexation each year
o Weighted average unexpired lease term of 9.3 years (including
rental guarantees) at 30 September 2021 (30 September 2020: 9.1
years)
-- Numerous opportunities to drive income and capital growth into the future:
o 145,068 sqm of land that can be developed
o 30,938 sqm of floorspace subject to rental guarantees
Post year-end activity
-- Continued to deploy proceeds of September 2021 equity raise,
agreeing to acquire a recently built prime logistics asset for
EUR32 million and agreeing to acquire land and fund the development
of a EUR118 million prime asset, both in the Rhine-Ruhr region of
Germany. Acquired a 48,000 sqm logistics asset close to Piacenza in
Italy for EUR50m
-- Issued the Company's first private placement of EUR200
million, further diversifying its sources of debt funding and
extending the weighted average maturity of the debt facilities
-- Completed a new green lease on the vacant unit in Nivelles,
Belgium, on a nine-year lease to a leading Belgian supermarket
operator at a rent 8% above the previous rental level
Robert Orr, Chairman of Tritax EuroBox plc, commented:
"This has been a significant year in the Company's development,
as the business's growing maturity has helped us to build both
scale and momentum. We are successfully implementing our strategy,
acquiring prime assets in excellent locations, extracting value
from the existing portfolio and continuing to advance our ESG
agenda. This has helped us to deliver a strong financial
performance and meaningful dividend growth. Our success this year
has been underpinned by our ability to raise new equity and the
issuance of our first green bond, which in turn reinforces our ESG
strategy.
"Our market remains highly attractive, with strong occupier
demand driven in particular by the accelerated growth of
e-commerce, combined with limited supply of large, high-quality and
sustainable space to rent in prime markets. We see attractive
opportunities to add assets to the portfolio that have built-in
value creation opportunities and remain confident of further growth
in the coming year."
A Company presentation for analysts and investors will take
place via a live webcast and audio only dial in at 1000 (GMT) on
the day.
To view the live webcast, please register at:
https://www.investis-live.com/tritaxeurobox/61a0fe53e4767b1300c1a668/twhwk
The audio only dial in is available using the following
details:
+44 (0) 203 936
Phone number: 2999
Participant access
code: 276462
The presentation will also be accessible on-demand later in the
day from the Company website:
https://www.tritaxeurobox.co.uk/investors/ .
Notes
1 Like-for-like increase of 11.9%.
2 Following the October 2019 update to EPRA's Best Practice
Recommendations Guidelines and the, the Company has adopted EPRA
net tangible assets (NTA) as its primary EPRA measure of net asset
value and restated its September 2020 position in line with this
change. See note 25 of the Financial Statements for
reconciliation.
3 As per KPI definition
4 See note 12 to the financial statements for reconciliation
5 By rental income
6 Including licence fee income and rental guarantees
7 Including rental guarantees
For further information please contact:
Tritax Group
+44 (0) 20 8051 5070
Nick Preston
Mehdi Bourassi
Jo Blackshaw / Ian Brown (Investor Relations)
Maitland/AMO (Media inquiries)
James Benjamin
+44 (0) 7747 113 930
tritax-maitland@maitland.co.uk
The Company's LEI is: 213800HK59N7H979QU33.
Notes:
Tritax EuroBox plc invests in and manages a well-diversified
portfolio of prime Continental European logistics real estate
assets that are delivering an attractive capital return and secure
income to shareholders. These assets fulfil key roles in the
logistics and distribution supply-chain focused on the most
established logistics markets and on the major population centres
across core Continental European countries.
Occupier demand for Continental European logistics assets is in
the midst of a major long-term structural change principally driven
by the growth of e-commerce. This is evidenced by technological
advancements, increased automation and supply-chain
optimisation.
The Company's Manager, Tritax Management LLP, has assembled a
full-service European logistics asset management capability
including specialist "on the ground" asset and property managers
with strong market standings in the Continental European logistics
sector.
Further information on Tritax EuroBox plc is available at
www.tritaxeurobox.co.uk
CHAIRMAN'S STATEMENT
The last twelve months have seen the Company build significant
momentum. The scale of the business has grown through our ability
to access both equity and debt capital, which in turn is enabling
us to invest for further growth. In line with the evolution of our
strategy, as articulated in December 2020, new investment is
increasingly focused on opportunities where we can create
additional value, by acquiring assets earlier in their development
cycle, applying the Manager's asset management skills and by
developing unutilised land. We also continue to advance our ESG
agenda, which informs everything we do across the business, from
how we engage with our tenant partners, to our acquisition
criteria, to the debt financing we have raised this year.
While the Covid-19 pandemic has been challenging for society, it
has served to reinforce the importance of the logistics sector as a
whole, and hence the real estate the Company owns, especially
highlighting the critical nature of sustainable supply chains. In
particular, it has accelerated the adoption of e-commerce and
encouraged companies to shorten and simplify their supply chains.
Occupier demand for assets has therefore continued to grow while
occupational supply remains constrained, creating a supportive
investment environment for long term asset owners such as us.
Successfully implementing our value creation strategy
We have continued to successfully implement each aspect of our
strategy this year. During the period, we acquired four standing
assets and agreed the forward funding of a further three. In doing
so, we have added depth in existing countries and expanded into the
key Nordics logistics market. These acquisitions included a number
of value-add opportunities, in line with our investment strategy.
The increasing scale of our portfolio, underpinned by a majority of
secure long leases, allows us to be more opportunistic and take on
a controlled level of these value-add and land projects, enabling
us to effectively manage risk and protect earnings, while
delivering strong total returns to investors.
All the assets acquired are in prime logistics locations in core
Western European countries, which remain our primary focus for
investment. Our unique developer relationships enable us to source
assets at attractive pricing, while we continue to exercise
rigorous investment discipline and will not consider secondary
locations in exchange for perceived discounts.
The Manager has also made further progress in extracting the
value embedded in the existing portfolio, with a range of leasing,
development and expansion opportunities either completed or under
way at the year end.
Financial performance, dividends and total returns
The Company delivered another strong financial performance, with
the acquisitions in the year contributing to robust growth in
rental income and profits.
We have declared four quarterly dividends of 1.25 cents each in
respect of the year, giving a total dividend of 5.0 cents per
share. This represents growth of 13.6% on the 4.40 cents per share
paid in respect of the previous year.
The total dividend is 80.2% covered by Adjusted EPS, reflecting
the increase in shares in issue as a result of the two equity
raises (see below) and the time required to invest the proceeds in
income-producing assets. We expect the dividend to be fully covered
in the year to 30 September 2022, in line with our policy to pay
out 90-100% of our adjusted EPS each year, with a minimum pay out
of 85% assuming no major capital events.
The dividend is an important driver of our Total Return, along
with the returns we create through active asset management and
capital growth. The Total Return for the year was 14.3%, ahead of
our target of 9% per annum and reflecting the growth in the
dividend and the portfolio valuation.
Financing
This was a significant year for raising both the debt and equity
capital we need for the next stage of our growth. This reflects the
growing maturity of the business and the attractions of logistics
real estate investments to investors and lenders. We also recycled
capital for reinvestment through the sale of an asset in Poland and
we continue to be rigorous and disciplined in appraising the
portfolio, to identify further opportunities for capital
recycling.
Having reached full deployment at the end of 2020, we were
pleased to raise EUR230 million in March 2021 through a
substantially oversubscribed equity issue. The acquisitions
outlined above quickly deployed this capital and with the Manager
having identified an attractive further pipeline of opportunities,
we raised an additional EUR250 million through another
oversubscribed equity issue in September 2021. In addition to
underpinning our strategy, the equity raises have broadened the
Company's share register and boosted the liquidity of the shares.
With a market capitalisation of EUR1.06 billion (GBP911.56 million)
at 30 September 2021, we were included in the FTSE 250 index with
effect from 1 October 2021.
On 12 March 2021, the Company reached another key milestone with
Fitch assigning a BBB- long term corporate credit rating. This
marks the first Investment Grade rating of the Company. This has
opened up new sources of debt financing and we were pleased to
issue a debut EUR500 million green bond in June 2021. The issuance
was significantly oversubscribed which led to a substantial
reduction in our cost of debt. As set out in the Manager's Report,
by the year end we had allocated all the proceeds of the green bond
to refinance existing assets and fund acquisitions during the
year.
Sustainability
A robust approach to ESG issues has never been more important.
We have always had strong governance and this has been an underpin
of the Group's success to date. We are also progressing our work on
environmental and social matters, which we recognise as critical to
all our stakeholders. Sustainability considerations are fully
integrated into every aspect of our operations and the Manager's
Report details how we have implemented our sustainability strategy
this year. We continue to work closely with our tenant partners to
enhance the sustainability performance of our assets and to support
their ESG strategies through energy and carbon reduction measures.
The Board received training on two occasions during the year,
covering ESG investment and regulations.
Board and Governance
The Board has continued to provide robust oversight of the
business during the year, and has been closely involved in
discussions with the Manager about a number of topics, especially
around the financing strategy and Company growth.
Post year end activity
We expect to deploy the proceeds of the September equity raise
within three to four months and since the year end have acquired a
further 3 assets, two in Germany and one in Italy, for combined
consideration of EUR200 million.
We have also issued a EUR200 million private placement loan
facility, the first for the Company. This further diversifies our
sources of borrowing, while extending the average maturity of our
debt and reducing its cost.
Outlook
The Company is strongly positioned as it enters the new
financial year. The occupational market is increasingly favourable
and we expect the trends of strong occupier demand, driven by
e-commerce and the reinforcement of fragile supply chains, to
continue in the long term. When considered alongside limited new
supply of logistics space, we expect consistent, sustained rental
growth in prime logistics markets. We are confident of being able
to extract further value from the existing portfolio through,
amongst other initiatives, capturing this rental growth through
asset management and development activities.
We are well placed to continue delivering the Company's strategy
through considered growth in accretive new investments which the
Manager is able to continue to access. As has been demonstrated
through this year our investor base is supportive of continued
growth to further diversify the portfolio to provide a lower risk
investment product, while also accessing a dynamic and strongly
performing sector of the real estate market.
The Board is therefore confident that the Company is well placed
to make further progress and deliver value for all its stakeholders
in the year ahead.
Robert Orr
Chairman
6 December 2021
OUR MARKET
We operate in a highly attractive market. While each European
country is different, there are several common themes:
-- occupational demand in prime logistics markets is strong and
growing, driven by powerful long-term trends;
-- there is a highly constrained supply of assets that are
available to occupy in the right locations, and a similarly
constrained supply of land on which to build new buildings;
-- this demand-supply imbalance is driving rental growth and
improving lease terms; and
-- the favourable dynamics of the occupational market are
driving record levels of interest from investors.
Powerful long-term trends driving occupational demand
We have identified a number of powerful structural trends
driving occupier demand, with three in particular which we expect
to sustain this demand over the long-term:
-- the rapid growth of e-commerce, which requires companies to
have large and often highly automated logistics facilities, close
to major population centres and strong transport links;
-- the need to optimise, reinforce and de-risk supply chains,
for example by consolidating into fewer, larger and more efficient
buildings, which makes the supply chain more resilient and reduces
costs; and
-- the growing necessity for businesses to operate from
sustainable properties, with lower environmental impacts and
workspace that promotes employee wellbeing, and that will remain
fit for purpose for years to come.
The continued growth of e-commerce
The move to online shopping is one of the key drivers of
occupational demand for large logistics assets. Faced with the high
costs of occupying shops and rising online spending, retailers are
consolidating their physical store operations and creating a
combined in-store and online "omnichannel" presence.
The pandemic has accelerated this trend by changing consumer
behaviour, as many people shopped online for the first-time during
lockdowns. Across Europe, 72% of people shopped online in 2020, up
from 56% in 2013(1) . 2020 saw the biggest single year jump in
online shopping penetration as measures taken to combat COVID
forced individuals to reconsider how they transact.
The percentage of individuals shopping online varies
significantly across Europe. Penetration rates in countries such as
the Netherlands, Sweden and Germany are high and have grown further
through COVID. Large, wealthy populations in these markets are
driving strong demand for e-commerce. CBRE report online retailers
see expansion in urban locations in these markets as a high
priority. Elsewhere in Europe, markets such as Italy and Spain are
seeing ecommerce penetration grow rapidly but from a much lower
base. 54% of Italians and 66% of Spaniards shopped online in 2020,
up from 32% and 43% respectively in 2013(1) .
We expect many of these new users will continue to buy online,
resulting in a step change in e-commerce activity. Research from
RetailX shows that across Europe as a whole, nearly 80% of
consumers expect to maintain or increase their level of online
shopping when the world returns to normal.
A successful omnichannel model increasingly relies on large,
flexible, modern, well-located logistics properties, enabling
retailers to offer consumers access to their entire product range
and then quickly, flexibly and cheaply deliver those orders and
manage returns, while also having the ability to add capacity as
they grow.
Optimising supply chains
Even before Covid-19, many businesses faced persistent pressure
on their supply chains. As a result, occupiers are consolidating
into fewer, larger, and more modern distribution assets. This
provides them with economies of scale and the opportunity to
automate processes which would not be possible in smaller,
disparate properties, helping them to improve their systems, reduce
costs and have the flexibility to meet growing demand. Larger units
also tend to be taller, allowing for mezzanine floors and more
efficient automated racking and storage systems.
The impact of the pandemic and events such as the Suez Canal
blockage and the recent spike in shipping costs have shown
occupiers the vulnerability of their supply chains. Research
suggests(3) occupiers are looking to minimise the risk of future
disruption by increasing inventories, diversifying and/or
re-shoring, and adding back-up storage space. They are also
accelerating long-term plans to ensure facilities can cope with
increased online business. Automation is an important part of this
process which also improves resilience against Covid-19 and
potential future pandemics, in part by reducing the reliance on
close human interaction.
Occupying sustainable assets
Sustainability is increasingly central to our tenants' corporate
strategies, not only reflecting the potential cost savings of
energy efficiency, but also by being responsible corporate citizens
and demonstrating the need to respond to growing consumer awareness
of sustainability issues. By occupying assets built with
state-of-the-art design and materials, and which incorporate
low-carbon technologies and energy efficiency, they can minimise
their environmental footprint and optimise their use of natural
resources.
Sustainable assets are also more attractive investments for us,
offering lower obsolescence, lower capital expenditure and greater
long-term appeal to occupiers and investors. Importantly, this
accords with our aim to continue to lower our carbon footprint, to
align with the Paris Agreement to limit global warming.
Real estate market fundamentals and investment markets
Continued strong take-up
Occupier demand has been consistently strong for many years,
driven by the structural demand drivers mentioned above, with
take-up across Europe(4) averaging 22 million sqm per annum since
Q3 2016. 12-months take-up to end of Q3 2021 totalled 25 million
sqm; 24% above the corresponding figure in 2020. Net absorption
(which is the change in occupied space during the period), has also
been growing across Europe since 2010(2) .
Supply remains constrained
The location of logistics assets is fundamental. In Continental
Europe, prime logistics locations are typically close to densely
populated conurbations and have excellent transport links for wider
distribution, a suitable labour supply and sufficient power to
operate substantial automated systems.
In these locations, there are ever fewer suitable vacant
buildings and little land on which to build new ones. There are
even fewer sites available that can accommodate the very largest
logistics facilities and municipalities are often reluctant to zone
land for the construction of these assets, particularly in areas
with denser populations. Companies looking for large new logistics
facilities have few choices.
Recent years have seen a pick-up in new supply delivered to the
market in response to high levels of take up and improving market
conditions. Developers are moving speculative schemes forward, but
we expect to continue to see high levels of net absorption as
demand remains robust. Urban permitting, land scarcity, rising land
values and construction costs remain barriers to development in
many core markets. This will add further pressure to an already
constrained logistics market.
Vacancy at or near its lowest level since 2010
Logistics vacancy rates for Continental Europe are at or near
their lowest since 2010. Vacancy rates in Belgium and Germany
reached new lows of 0.5% and 2.2% respectively in Q3 2021.
Available space in both markets is extremely tight with most of the
buildings under construction or due to complete already pre-let.
Current vacant space in the seven main European logistics markets
is around 38% of the average five-year annual take-up(2) .
Supply and demand dynamics provide attractive prospects for
rental growth and improving lease terms.
Rental growth increasingly prevalent across Europe
Since 2017, the supply-demand imbalance in prime European
logistics locations has contributed to rising rental levels. During
the year to Q3 2021, prime headline rents grew by 9.1% in Belgium,
4.9% in Germany and 3.6% in Spain(2) . Headline prime rents in all
seven core European markets are now higher than 2 years ago.
The Manager's focus on asset selection positions us well for
future rental growth, with 14 out of the Group's 15 assets located
in markets where vacancy rates are below 5%(6) . Another important
effect now evident in some European markets is the potential to
improve lease terms in favour of the property owner. Leases in
Europe have typically been relatively short at an average of five
years and often contain occupier-friendly clauses, such as
restricted indexation provisions, and tenant only extension
options. However, the dynamics described above mean that occupiers
are increasingly keen to retain long-term control of their
properties, particularly given their often-substantial investment
in fitting out and automation, and the ever-greater importance of
an efficient supply chain in the wake of Covid-19. They are
therefore signing longer leases to secure their occupation and
amortise these costs over a longer period. Longer leases also suit
international companies who want to harmonise their lease
obligations across geographies.
The trend to longer leases is evidenced by our portfolio, which
has a WAULT of 9.3 years at 30 September 2021.
Investment demand remains robust
The dynamics of the occupational market make the logistics
subsector highly appealing to investors, who are attracted by the
robust income streams and the potential for income and capital
growth.
The investment market for logistics real estate assets is
therefore competitive. Year-to-date through Q3 2021, investment
volumes totalled EUR18.4 billion(5) , up 29% on the same period in
2020(2) . Spain and Italy have seen large year-on-year increases as
investors look to capitalise on market fundamentals that while
improving, have somewhat lagged more northern parts of Europe.
Conversely, investment volumes in Belgium remain relatively muted,
despite a record low vacancy rate and robust rental growth. New
entrants continue to seek investment opportunities, which remain
very limited.
Strong investment demand contributed to further yield
compression, with prime yields across Europe declining by 57 basis
points since Q4 2020 to 3.75% at Q3 2021. The weight of capital
looking to source attractive logistics investments in Spain and
Italy has helped push yields in both countries down by around 60
basis points to 4.15% and 4.35% respectively. Core European
logistics markets such as Germany, France, the Netherlands, and
Belgium also saw yields compress further. Prime assets in these
markets are currently trading at between 3.2% and 3.5%(2) .
While we expect investment demand for logistics properties to
remain strong, particularly in the core markets we are targeting,
we also anticipate that investor attention will at some stage
return to sectors such as offices and retail, as clarity increases
about rental values and total return prospects in a post-Covid-19
environment.
(1) Source: Eurostat
(2) Source: CBRE
(3) Source: CBRE 2021 European Logistics Occupier Survey
(4) European data used in this report considers the following
markets: Belgium, France, Germany, Italy, the Netherlands, Poland
& Spain unless otherwise stated
(5) European market data used, covers the following markets:
Germany, France, Poland, Czech Republic, Italy, the Netherlands,
Spain, Belgium, Hungary, Romania & Slovakia
(6) Vacancy as per CBRE data, Q3 2021
OUR BUSINESS MODEL
We acquire, lease and manage large logistics assets across
strategic locations in core countries in Continental Europe.
We aim to deliver consistent returns to shareholders over the
medium to long term, through investing in properties that deliver
secure and rising rental income and capital growth.
Our advantages
The Manager and the Board
The Manager and the Board together are responsible for devising,
implementing and evolving our strategy.
The Manager's logistics sector specialism provides exceptional
focus and understanding of the dynamics of the sector to enable
this. It benefits from a deep pool of resource with many years of
combined experience in the European logistics real estate market,
providing shareholders with unrivalled execution capability. The
Manager's expertise and reputation make us an attractive partner
for occupiers and for sellers looking to dispose of their
assets.
The Manager's skills include strategy formulation and portfolio
construction, sourcing and acquisition of assets; management, in
conjunction with our retained asset managers, to unlock value from
assets; development; implementation of hold/sell strategies; and
disposal. Layered throughout these disciplines is market-leading
in-house tax, legal and accounting knowledge.
Developer relationships
The relationships with our development and asset management
partners Dietz, Logistics Capital Partners (LCP) and Verdion are
key advantages for us. They give us access to competitively priced,
top-flight investment opportunities in the key European logistics
markets.
As well as these relationships, the Manager has a wide contact
base of other investors, developers and occupiers in the market,
which also provide reliable and attractive investment
opportunities.
How we create value
Source high-quality investments
The Manager uses its experience and relationships to acquire
properties for us which are not being openly marketed, thereby
reducing competition for them. We can also expand our portfolio by
extending properties and building on our existing sites, enabling
us to invest at more advantageous rates than in the open
market.
Buy and sell for value
Before acquiring an asset, the Manager assesses its fit with our
investment criteria and with the existing portfolio, to ensure good
diversification and avoid concentration of risk. All acquisitions
are analysed for future performance prospects, based on a wide
range of different metrics including location, building layout and
design and current and future leasing characteristics.
Develop on a risk-controlled basis
We may invest in forward funded developments, which have either
been pre-let to a tenant or benefit from a rent guarantee. This
enables us to invest in well located, brand new, environmentally
friendly buildings, substantially reducing any development
risk.
We can also acquire land already zoned for logistics use, either
as part of an asset acquisition or as a discrete parcel of land.
This allows us to capture a greater share of the development
profit.
Proactively and responsibly manage assets
The Manager works with our tenant partners to maximise the
building's usefulness to their operations and to adapt it as their
needs change. Close contact with tenants and other local
stakeholders helps unlock value for the long term.
Sustainability
Sustainability is at the heart of this approach, helping to
ensure we acquire and invest in sustainable assets, to future-proof
our portfolio and ensure it generates long-term returns for
shareholders, while protecting the environment and benefiting local
communities, creating financial and non-financial value.
We carry out Sustainability Risk Assessments on acquisition of
assets, giving us valuable information about the sustainability
risks and opportunities. We then create Sustainability Action Plans
(SAPs), which identify asset management and operational
initiatives. We use these to engage our tenant partners and
collaborate on sustainability projects. The SAPs are updated
annually.
The value we create
For our tenant partners
Our tenant partners benefit from large, modern, flexible,
sustainable and well-located logistics space, owned by a landlord
who is an expert in the sector and committed to understanding and
supporting their operations in the long term. We also aim to
provide decent workplaces for tenant's employees.
For society
Our assets are integral to the surrounding communities. They
support local employment and generate tax revenues which support
local and national government spending. Our assets also enable
modern lifestyles, particularly in online shopping, allowing rapid,
low cost delivery and wide consumer choice.
For the environment
Our approach to sustainability aims to transition our portfolio
to net zero carbon, while enhancing biodiversity on our sites. This
protects us from the extreme impacts of climate change and
environmental damage.
For shareholders
We look to offer good investment returns through paying a
progressive, secure and sustainable dividend and capital value
growth. Our dividend and Total Return targets are set out on the
Key Performance Indicators section.
For lenders
Our lenders benefit from having interest serviced from diverse,
regular and stable cash flows, generated by financially strong
tenants occupying top quality real estate.
How we generate returns
A large proportion of our Total Return is generated from the
rents which our tenant partners are contracted to pay to us under
mostly multi-year lease contracts. We typically receive
inflation-linked rental increases each year and capture market
rental growth through asset management. Around two thirds of our
rental payments are received monthly in advance, with the remainder
being received quarterly in advance, meaning our highly visible
revenue converts quickly into cash.
Our cost base enables us to convert a significant proportion of
our rental income into profit. A number of our costs are partially
or largely fixed, which will result in increasing profitability as
the portfolio expands.
This growth in income is directly converted into capital growth.
Additional capital growth may come through asset management, our
acquisition processes and development activities, as well as yield
compression across the market.
MANAGERS REPORT
The Company's strategy is designed to create value at the point
of asset acquisition and throughout the life cycle of an asset,
through:
-- careful asset selection, following our four-pillar investment philosophy;
-- proactive asset management, to drive value from the existing portfolio;
-- a robust focus on sustainability; and
-- appropriate financing, including a progressive and active capital management programme.
The Company made good progress with all elements of its strategy
during the year, as set out below.
Further strengthening the portfolio
We continue to construct a portfolio which is diversified by
geography and tenant and that generates a high and secure level of
inflation-linked income, as well as capital growth, which will in
turn support and deliver the Total Returns and dividends we are
targeting.
The Company's investment strategy tilts towards increased
weighting in new investment in assets with value-add opportunities
where we can maximise value creation, either by acquiring assets at
an earlier stage in their development cycle (including buying land
or forward funding developments), buying assets with vacancy so we
can control the leasing, or developing unutilised land purchased
with an asset. This approach will generate new Foundation assets
for the portfolio, as well as including shorter-term projects where
we can extract value and then sell. We will also continue to
acquire Foundation and Growth Covenant assets, where we can source
attractive opportunities.
We continued to add to the Company's portfolio during the year,
making the acquisitions set out below:
Nivelles, Belgium . In January 2021, the Company acquired a
newly built 34,125 sqm logistics facility for EUR31.2 million,
reflecting a net initial yield of 4.8%. The asset comprises two
units, one of which is let to Medi-Market Group SA on a new
nine-year lease, subject to annual indexation. The second, slightly
smaller unit was vacant on acquisition and had a 12-month rental
guarantee. We have recently signed a new lease on 16 November 2021
to a leading Belgian supermarket for 9 years, with a break option
at six years at EUR793,553 rent per annum, reflecting EUR44.8 per
sqm.
Geiselwind, Germany . In April 2021, the Company purchased a
highly sustainable 70,353 sqm asset, located between Nuremburg and
Frankfurt. The highly specified logistics building is the European
distribution headquarters of Puma SE, the German based global
sportswear manufacturer and retailer. It has been developed to be
carbon neutral in its operations and exhibits a full range of ESG
credentials. The property is leased until 2035 and benefits from
indexation to 100% of the German CPI index, following a four-year
indexation holiday from the start of the lease but recovering the
full indexation uplift since the start of the lease at the end of
the holiday. The 20-hectare site comes with extension potential for
an additional 42,000 sqm of floorspace.
Lich, Germany . In June 2021, the Company completed the
acquisition of a 94,429 sqm growth covenant asset, leased for 15
years to Wayfair GmbH. The asset is in a prime location north of
Frankfurt. The lease is annually indexed to 100% of German CPI,
following a three-year indexation holiday at the commencement of
the lease. The high-specification construction also allows for the
building to be subdivided into nine units.
The total consideration for the two assets in Germany was
EUR290.9 million, excluding acquisition costs, reflecting a
combined net initial yield of 3.9%. The rental income of the two
assets is EUR11.38 million per annum. Both have been constructed to
high sustainability standards (see the Implementing Our ESG
Strategy section) and were developed by Dietz AG, one of the
Company's retained development partners. Dietz AG remains a
minority shareholder in the assets.
Gothenburg, Sweden . On 16 June 2021, the Company announced its
first investment in the Nordic region. The Port of Gothenburg is
one of the most attractive logistics locations in the Nordics and
has very low levels of logistics vacancy in the area. The asset
comprises two purpose-built logistics facilities totalling 28,900
sqm. Importantly, the asset is held freehold which is unusual in
the Port of Gothenburg, hence giving the Company unfettered control
of the site in the future. The buildings are fully let to Agility
AB, Nordicon AB and Vink Essåplast Group AB, generating a total
annual rent of EUR1.79 million on leases with a WAULT of six years.
All leases are annually indexed to 100% of Swedish CPI. NCAP has
been appointed as asset manager for this asset. The acquisition
price of EUR47 million reflects a net initial yield of 3.6% based
on the income from the existing leases, with the opportunity to
increase the yield to around 4.25% as the rental levels on the
buildings are marked to market levels.
Turin, Italy . In August 2021, the Company announced the forward
funding acquisition of a 28,249 sqm asset in Settimo Torinese near
Turin, for a total consideration of EUR24.4 million. The property
will be developed by LCP under a fixed-price development contract.
LCP will provide a rental guarantee of EUR1.277 million from
completion, based on 12 months' estimated rental value. The Italian
logistics market is currently characterised by record levels of
occupational take up, particularly in the northern part of the
country, as well as vacancy rates for logistics buildings of only
2.6%. As at 30 September 2021, the deal was signed but not yet
completed. The acquisition closed on 25 November 2021.
Oberhausen, Germany . In September 2021, the Company announced
the forward funding acquisition of a 23,346 sqm logistics asset,
its eighth in the key German market. The fixed purchase price is
EUR29.9m and the Company will benefit from a 12-month rental
guarantee from the developer, Verdion, of EUR1.313 million from
completion of construction. The associated land purchase is
conditional on receiving the building permit and access rights,
which are both expected in the near term. As at 30 September 2021,
the deal was signed but not yet completed.
Rosersberg, Sweden. In September 2021, the Company announced the
forward funding acquisition of its second asset in Sweden. The
13,181 sqm facility is in a prime location north of Stockholm and
is being developed by Verdion, which is expanding into the Nordic
countries. The total cost is capped at EUR27.9 million and the
Company will receive an income return equivalent to the net initial
yield from completion of the land purchase (which is conditional on
receiving the building permit), as well as a 12-month rental
guarantee of EUR1.18 million from completion of construction. As at
30 September 2021, the deal was signed but not yet completed. The
acquisition closed on 30 November 2021.
The Company continues to actively manage the portfolio and
announced in February 2021 that it had agreed the sale of its asset
in Lodz, Poland. This was one of the earlier asset purchases for
the Company and having completed the forward funding pre-let
development opportunity at the site in 2019, there were no imminent
asset management opportunities remaining. The sale price of EUR65.5
million was 15% above the most recent valuation and delivered an
attractive geared internal rate of return of 16.5% to shareholders.
We will continue to actively review the portfolio for further
opportunities to add value in this way.
Portfolio composition
As a result of these transactions, at the year end the portfolio
comprised 15 assets, which were well diversified by building size
and tenant, and situated in the core European countries of Belgium,
Germany, Italy, the Netherlands, Poland, Spain and Sweden. These
assets are key to our tenant partners' logistics and distribution
supply chain needs, and are:
-- modern, with 84% (by area) of the portfolio having been built
in the last five years, helping to ensure that the buildings meet
the latest operational and sustainability needs of occupiers;
-- large, with nearly 55% of the portfolio (by income) being in
excess of 50,000 sqm and an average size of 70,000 sqm;
-- sustainable, with nearly 87% of the portfolio by floor area
covered by Green Building Certifications and highly energy
efficient, with 100% performing higher than their best practice
benchmarks against their Energy Performance Certificates;
-- income generating, with the portfolio having been constructed
to deliver secure and growing income and around 76% of the
Company's tenant partners being multi-billion Euro businesses,
including some of the world's best-known companies; and
-- secured on long leases, resulting in a WAULT at the year end
of 9.3 years, well ahead of the Company's target minimum of five
years. The unexpired lease terms at the year end ranged between 0.3
and 15.3 years. The portfolio is deliberately constructed with a
range of lease expiries, with the longer leases offering security
of income, and the shorter leases providing opportunities to add
value through capturing market rental growth.
The portfolio also delivers inherent income growth, with some
95% of the Company's rent including an element of annual
indexation. Rental uplifts are either fixed or indexed to local
inflation, thus offering the regular compounding of income that
supports the Company's dividend policy, as well as providing
protection if European economies experience higher inflation. We
also look for opportunities to capture market rental growth, which
we expect to exceed indexation, through asset management
initiatives.
Asset management: capturing embedded value
As the portfolio matures, we continue to unlock opportunities to
add value. This requires us to maintain close relationships with
the Company's tenant partners, so we understand their businesses
and how we can support their growth plans through proactive asset
management.
Leasing activity
In December 2020, we agreed a new green lease at the Company's
property in Breda, the Netherlands, letting the two vacant units to
a new high-quality tenant, Samsung SDS. The letting was secured
before the expiry of the 12-month rental guarantee. The lease runs
for three years from 15 December 2020 at an initial annual headline
rent 6% above the rental guarantee. The rent is subject to annual
uplifts reflecting 100% of the Dutch Consumer Price Index. The
lease agreement contains green clauses to ensure the tenant's
commitment to using the building in a sustainable way, including
sharing data with us on energy and water consumption, waste
management and recycling.
The Company also signed a new short-term lease at the vacant
unit in Strykow, Poland, with the lease commencing in May 2021 for
ten months. This forms part of the wider strategy on this building
to extend the occupancy on the adjacent development land and
secures cashflow while we consider the next steps.
Since the period end we have made progress on the letting of the
vacant unit in Nivelles, Belgium, where a new lease to a Belgian
supermarket operator was signed on 16 November 2021.
Expansion opportunities
In November 2019, the Company agreed an option to fund an
extension to the Mango global distribution centre in Barcelona.
Construction of the 93,931 sqm extension began in June 2021,
following receipt of the necessary permissions. The Company is
financing the construction at a highly attractive yield on cost of
8.8%, on an estimated capital commitment of EUR31.5 million. The
extension will increase the facility's gross internal area to
approximately 280,000 sqm, including mezzanine floors. Practical
completion is targeted for September 2022, at which point the
extension will be incorporated into the existing lease, which runs
until December 2046.
The extension will be constructed to a BREEAM Very Good
standard, in line with the Company's ESG standards. We are working
with Mango to install solar panels, to optimise and reduce energy
consumption within both the existing building and the extension.
The Company will commission an updated EPC on completion.
Development opportunities
When the Company acquired the asset at Bornem, Belgium, it
included zoned land with the potential to develop around 15,000 sqm
of warehouse space, the Company started the development of the site
in January 2021, in conjunction with our partner LCP, with
practical completion achieved on 3 September 2021. The building
will achieve a BREEAM In Use Certificate once it is in operation.
The Company has been actively marketing the property and has
received good levels of interest. The yield on cost is expected to
be circa 9%.
The portfolio includes a number of other plots of land,
including at the asset in Strykow, Wunstorf and Geiselwind.
Implementing our ESG strategy
The Company's ESG strategy encompasses owning healthy and
sustainable buildings, improving the portfolio's energy and carbon
performance, enhancing nature and wellbeing, and creating social
value. We made further progress with this strategy throughout the
year. Highlights included:
-- the issuance of our first green bond (see the Financial Review);
-- an improvement of 18 points in our GRESB score, demonstrating
progress towards achieving our sustainability targets for 2023;
-- engaging with our tenant partners throughout the year to
understand their sustainability needs and making good progress with
obtaining operational performance data (89% by floorspace) to help
measure and manage their environmental impacts; and
-- signing up to the World Green Building Council's Advancing
Net Zero Carbon Commitment, which confirms our commitment to
achieving net zero carbon by 2030.
Healthy and sustainable buildings
Our acquisition due diligence now explicitly integrates ESG
considerations. This includes assessing risks such as changes to
legislation, contaminated land or flooding, as well as
opportunities to improve environmental performance or wellbeing for
tenants' employees. We also consider the area surrounding the
asset, including how well it is served by public transport, a
'walkability' score and the distance to green space or amenities.
Other considerations include internal and external air quality,
electric vehicle charging and cycle facilities. Opportunities for
improvement are included in our asset management plans and
sustainability action plans, which we create for every asset and
deliver in conjunction with tenant partners.
All the Company's new developments will obtain Green Building
Certifications and have strong sustainability credentials. We set
ESG standards with our development partners, including a
sustainable construction brief and a supplier code of conduct.
Specific achievements in the year included signing four green
leases, including the new lease with Samsung at Breda (see Asset
Management above) and with HAVI at Wunstorf, as well as lease
regear on the asset Bornem, incentivised by investment in green
initiatives for the tenant partners. Our long term ambition is to
have all assets let on green leases. The assets acquired in the
year have strong sustainability credentials. In particular:
-- Geiselwind, Germany. The property is one of the most
sustainable logistics buildings in Germany. It is CO2 neutral,
built to LEED Gold standard, benefits from certified green energy
procurement, has a roof mounted photovoltaic system generating up
to 1.5 megawatts of electricity and has a 22,500 sqm green
roof.
-- Lich, Germany . The property has been built to high
sustainability standards, certified to DGNB Gold standard, and
benefits from a range of operational energy reduction measures. The
roof has the capacity to support the installation of solar PV
panels.
-- Nivelles, Belgium . The asset has roof mounted PV panels and
a power purchase agreement is in place with one of the tenants,
Medi-Market. Additionally, the asset benefits from sustainability
features including LED lights, energy efficient heating and
rainwater recycling.
-- Turin, Italy. The development targets a BREEAM Very Good
rating and looks to benefit from roof mounted photovoltaic
panels.
-- Oberhausen, Germany . The asset will be constructed to a
minimum of BREEAM Very Good and DGNB Gold certification, and will
include a range of energy saving initiatives and staff wellbeing
measures.
-- Rosersberg, Sweden . As is standard in the Nordic markets,
the ESG credentials of the development will be strong. The
development is targeting a minimum BREEAM Very Good certification
and will include energy saving and staff wellbeing measures.
Our ESG due diligence assessed the asset in Gothenburg as LEED
Gold standard and we have begun the certification process to obtain
this.
The acquisition of Geiselwind, Lich and Nivelles has increased
the number of assets with green building certifications, and we
have also obtained BREEAM In Use certifications at Rumst, Bornem,
Hammersbach and Bochum.
Energy and carbon
We aim to achieve net zero carbon for our direct activities by
2030. During the year, we switched to renewable sources for
landlord energy supplies, reducing our carbon emissions by 69%. The
Company consumed 8,144 MWh of landlord procured electricity and gas
(2020: 9,038 MWh) and generated carbon emissions totalling 1,256
tonnes (2020: 3,993 tonnes) (TCO2e). The switch to renewable energy
supplies brought the Company's indirect emissions (Scope 2) to net
zero carbon, and we continue to explore ways to bring our direct
emissions (Scope 1) to net zero carbon.
We acquire assets for the portfolio with low carbon designs,
such as Geiselwind, or which have opportunities to support energy
efficiency and carbon reduction in operation, for example through
investing in solar PV energy generation. As noted above, we are
working with Mango at the asset in Barcelona to install solar PV
and we are also discussing a solar PV project at Peine, Germany.
Together, these schemes will generate 2.2 MW of electricity a
year.
Prior to the sale of the asset in Lodz, Poland, we switched the
facility to renewable energy supplies. This saved 2,773 tonnes of
carbon in operations.
In support of our ambition to achieve net zero carbon, we have
assessed the portfolio against the Paris Agreement, which sets out
decarbonisation pathways to keep within global warming of 1.5(o) C
by 2050.
We are working with our retained development partners on
influencing their future construction methods to ensure ever
improving ESG measures on their new developments which will feed
into our portfolio.
Nature and wellbeing
We seek to improve biodiversity on the Company's land and
support health and wellbeing for tenant partners and their
employees. Doing so adds value and improves the experience of our
buildings for our tenants, aiding their productivity and staff
retention.
At the Company's asset at Wunstorf, Germany, we have installed
electric vehicle charging points for both lorries and cars. We have
also introduced beehives and meadows at Wunstorf and Rumst, to
support the local habitat through plant pollination. At Bornem, we
have fitted electric vehicle chargers and cycle parking.
At Breda, we completed a pre-assessment in preparation for
obtaining a Fitwel certification. Fitwel is the world's leading
certification system committed to building health.
Social value
We seek to create a positive social impact by supporting our
local communities and our tenant partners' value chains. We created
a Community Investment Fund in 2020, which supports our tenants'
investment in their local communities. During the year, the fund
invested approximately EUR22,000 to support projects around the
Rumst and Lodz assets.
This year, we have also created a new partnership with The
Mission to Seafarers, a global charity supporting those working in
sea freight. Sea freight has an indirect link to virtually all of
the operations of the Company's assets. During the Covid-19
pandemic, almost 400,000 seafarers were stranded at sea, unable to
come into port due to lockdown restrictions. This has recently
reduced to 150,000 but it remains a serious humanitarian crisis.
This results in distress and potential health issues, and also has
a significant economic impact by those affected not being able to
take on new work. During the year we therefore made a EUR15,000
emergency relief donation to support seafarers most affected by the
pandemic.
In addition to the emergency relief funding provided in 2021, we
have created a three-year partnership with The Mission to Seafarers
to benefit workers in the global logistics supply chain, and we aim
to contribute EUR75,000 over the three-year partnership. In 2022,
we are funding the Mission's operations in Myanmar, where there is
a critical effort to vaccinate seafarers to enable them to continue
their work. We have funded a bus that will be used to transport
workers to be vaccinated.
An attractive pipeline
At the year end, we had identified a near-term investment
pipeline of over EUR500 million of prime big box logistics assets
in key locations in Continental Europe. These comprised:
-- two German assets which were in exclusivity and the final
stages of due diligence; as well as Piacenza, for total
consideration of EUR200 million; and
-- six further assets for an aggregate investment of c.EUR350
million, including zoned development land and forward funding
developments.
Progress with acquiring the assets in the pipeline since the
year end is discussed in the Post Year End Activity section
below.
FINANCIAL REVIEW
Portfolio valuation
The portfolio was independently valued by JLL as at 30 September
2021, in accordance with the RICS Valuation - Global Standards. The
portfolio's total value at the year end was EUR1,282.6 million (30
September 2020: EUR839.3 million). This reflected a like-for-like
valuation increase of 11.9% during the year, driven primarily by
yield compression, as well as other factors such as our ability to
access properties at attractive pricing through our development
partners, rental value growth, the ongoing indexation of income and
the benefits of our asset management initiatives.
Financial results
Rental income
Gross rental income for the year was EUR43.9 million (2020:
EUR36.0 million), up 21.9%. The growth was primarily the result of
acquisitions during the year, as well as the benefit of rental
indexation.
In the financial year ended 30 September 2020, the Group
deferred EUR1.6 million of rent from a single tenant. The deferred
rent was repaid in full, in line with the agreement made with the
tenant, during the year to 30 September 2021. Under IFRS, rental
income from each lease is smoothed over the term of the lease and
hence there was no impact on reported IFRS revenue in this
financial year. However, Adjusted Earnings in the year were
increased by EUR1.6 million as a result.
During the year, the Group achieved 100% rent collection.
Costs
The Group's operating and administrative costs were EUR12.2
million (2020: EUR10.7 million), which primarily comprised:
-- the Management Fee payable to the Manager of EUR5.5 million (2020: EUR4.1 million);
-- a fee for running an Italian REIT ("SGR") with tax efficient
features similar to the UK REIT regime;
-- the Company's running costs, including accounting, tax and audit; and
-- the Directors' fees.
The EPRA Cost Ratio (inclusive of vacancy cost) has decreased
slightly to 30.5% (2020: 31.3%), whilst Adjusted EPRA Cost ratio
was 28.5%. The Group expects its EPRA Cost Ratio to drop during
next financial year. It is flagged as a key priority and will be
addressed by the Group shortly.
Interest expense and commitment fees
The total cost of debt for the year was EUR7.1 million (2020:
EUR7.7 million), with interest cover of 6.28 times (2020: 4.6
times). The interest expense benefited from lower average debt
levels, following the equity raise in March 2021, and a reduction
in the weighted average cost of debt in the year to 1.9% (2020:
2.3%). This reduction was driven by the following events:
On 12 March 2021, the Company announced that it was awarded an
investment grade credit rating of BBB- from Fitch Ratings Limited.
This resulted in a reduction of approximately 30 basis points in
the cost of the existing Revolving Credit Facility.
As detailed further below, the Company issued its first green
bond in June 2021, which has an annual fixed coupon of 0.95%. The
full benefit of the reduction in the cost of debt will come through
in the 2021/22 financial year.
The Group expects the average cost of debt to drop significantly
in the next financial year, yielding the benefit of the new sources
of debt.
Gain on revaluation
The fair value gain on the revaluation of the Group's investment
properties was EUR106.5 million (2020: EUR38.6 million). The
drivers of the valuation increase are discussed in the Valuation
section above.
Profit on disposal
On 15 February 2021, the Group announced that it had agreed the
sale of its asset in Lodz, Poland, for EUR65.5 million. This
represented a premium of 15% above its book value at 30 September
2020 and resulted in a net profit on disposal (post fees and post
capital gains taxes) of EUR4.3 million in the period (2020: EUR0.8
million).
Profit before tax
Profit before tax for the period was EUR129.0 million (2020:
EUR53.6 million).
Taxation
The current income taxation charge for the period was 8.6% of
the Company's net property income (2020: 1.2%). 82.4% of the tax
charge relates to the disposal of the asset in Lodz, with the
realised capital gain taxes being accounted for during the
year.
The taxation charge is primarily incurred in the local
jurisdictions in which the Company invests. As an HMRC-approved
investment trust, the Company is exempt from UK corporation tax on
its chargeable gains. The Company is also exempt from UK
corporation tax on dividend income received, whether from UK or
non-UK companies, provided the dividends fall within one of the
exempt classes under the Corporation Tax Act 2009.
The corporation tax rate in future periods will depend primarily
on the jurisdictions where the Company acquires assets, given the
differing tax rates across Continental Europe. The Company does not
use any structures designed to artificially reduce its tax
liabilities and looks to pay the appropriate level of tax where it
is due.
Earnings
As discussed under Equity Financing below, the Company's share
issues in March and September 2021 increased its issued share
capital by 91%, resulting in short-term EPS dilution in the second
half of the year. The proceeds of the March equity raise were
deployed by the year end and we expect the proceeds from the
September raise to be fully deployed shortly.
Basic EPS for the year was 19.59 cents (2020: 10.60 cents). EPRA
EPS, which primarily excludes the valuation movement, was 2.75
cents (2020: 3.26 cents).
The Board has adopted Adjusted EPS as a key performance
indicator. This adjusts the income shown in the Group Statement of
Comprehensive Income to reflect the underlying cash movements
and/or earnings that do not go through the IFRS Comprehensive
Income, including rental guarantees or licence fees and the EUR1.6
million in rent received that was deferred from the previous
financial year, as noted above.
Adjusted Earnings for the year were EUR24.7 million (2020:
EUR17.6 million), resulting in Adjusted EPS of 4.61 cents (2020:
4.16 cents). More information about the calculation of basic, EPRA
and adjusted EPS can be found in note 12 to the financial
statements.
Dividends
The Company has declared the following dividends in respect of
the year:
Declared Amount per In respect of Paid/to be paid
share
10 February 1.25 cents 1 October to 31 December 12 March 2021
2021 2020
18 May 2021 1.25 cents 1 January to 31 March 18 June 2021
2021
9 August 2021 1.25 cents 1 April to 30 June 10 September
2021 2021
7 December 1.25 cents 1 July to 30 September 14 January 2022
2021 2021
The total dividend for the year was EUR30.8 million (2020:
EUR18.6 million), or 5.0 cents per share, and was 80.2% covered by
Adjusted Earnings (2020: 94.4%), reflecting the short-term dilution
from the issuance of equity noted above.
Cash flow
The Group benefits from stable, growing and long-term cash
flows. Cash from operations in the period was a net inflow of
EUR30.3 million (2020: EUR32.3 million).
Net assets
The IFRS NAV per share at the year end was EUR1.31 (30 September
2020: EUR1.19). Information on EPRA's net asset valuation metrics
can be found in the EPRA Performance Measures section.
Equity financing
During the year the Company issued equity on two occasions,
raising EUR230 million and EUR250 million on 10 March 2021 and 22
September 2021 respectively. The respective issue prices were 103
pence (EUR1.19) and 115 pence (EUR1.31) and significant investor
demand resulted in both raises being significantly oversubscribed.
In total, 383,862,043 of new ordinary shares in the Company were
issued in the year.
Debt financing
On 27 May 2021, the Company announced the pricing of EUR500
million senior unsecured green bonds maturing on 2 June 2026. The
notes were significantly oversubscribed and are rated BBB- (Stable)
by Fitch Ratings. The notes were issued on 2 June 2021 and were
admitted to the Irish Stock Exchange's Official List and to trading
on the Global Exchange Market of the Irish Stock Exchange.
The issue significantly reduced the Company's average cost of
debt, with a coupon of 0.95% per annum. It represents the Company's
first step in diversifying its funding sources into the debt
capital markets and will support the Company in making a
significant and positive contribution to improving the
environmental impact of the logistics real estate and construction
sectors, through best-in-class asset acquisitions and
developments.
Since issuing the notes, the Group has allocated all the
proceeds to refinancing a number of existing green assets in the
portfolio as well as acquiring new green assets.
At the start of the year, the Company had a EUR425 million
Revolving Credit Facility (RCF) provided by a group of five lenders
- HSBC, BNP Paribas, Bank of America Merrill Lynch, Bank of China
and Banco de Sabadell. During the year, four of the five lenders
agreed to a one-year extension of the facility. Following the issue
of the green bond, the Company reduced the RCF to EUR250 million.
The facility is unsecured, providing operational flexibility for
the Company.
At the year end, the RCF was fully undrawn (30 September 2020:
EUR344.0 million was drawn). Combining with the proceeds of the
Bond, this resulted in an LTV ratio of 13.3% (30 September 2020:
41.1%). This compares with the medium-term target of 45% and the
maximum permitted by the Company's investment policy of 50%.
Post year end activity
Since the end of the financial year, the Company is progressing
well in the deployment of the proceeds of the September 2021 equity
raise, agreeing the acquisitions of two further prime logistics
assets in Germany, as well as Piacenza, for total consideration of
EUR200 million.
On 1 December 2021, the Company issued its first private
placement of EUR200 million, further diversifying its sources of
debt funding and extending the weighted average maturity of the
debt facilities. The notes have an average maturity term of 9 years
and an average coupon of 1.37%.
Related party transactions
Transactions with related parties in the period included the
Management Fee paid to the Manager, and the Directors' fees. More
information can be found in note 26 to the financial
statements.
Under the Listing Rules, the forward funding acquisition in
Italy discussed above was classed as a related party transaction.
Shareholders approved the transaction at a general meeting of the
Company on 27 August 2021.
The Group has identified an area of non-compliance in regards to
its treatment of a related party under the Listing Rules in
connection with certain of its acquisitions from Dietz AG (the
"Geiselwind" and "Lich" acquisitions). The Company has voluntarily
sought feedback from the FCA and is expecting feedback.
Since then, the Group addressed the issue on new acquisitions,
by issuing a Circular for Shareholders vote on the "Settimo"
acquisition and "Bornem" extension, as well as on the "Bonen" and
"Gelsenkirchen" acquisitions.
Alternative Investment Fund Manager (AIFM)
The Company is an Alternative Investment Fund within the meaning
of the AIFMD and has appointed the Manager as its AIFM. The Manager
is authorised and regulated by the Financial Conduct Authority as a
full scope AIFM.
KEY PERFORMANCE INDICATORS
Set out below are the key performance indicators we use to track
our strategic progress.
KPI and definition Comments Performance
1. Dividend The dividend reflects 5.00 cents/share for
Dividends paid to shareholders our ability to deliver the year ended 30 September
and declared in relation a growing income stream 2021 (30 September 2020:
to the period. from our portfolio and 4.40 cents/share)
is a key element of our
Total Return.
Our policy is to pay
an attractive and progressive
dividend, with the intent
to pay out 90-100% of
our Adjusted Earnings
each year, with a minimum
payout of 85% of Adjusted
Earnings.
---------------------------------- -----------------------------------------
2. Total Return (TR) The Total Return measures 14.3% for the year
TR measures the change the ultimate outcome ended 30 September 2021
in the EPRA Net Tangible of our strategy, which (30 September 2020:
Assets (EPRA NTA) over is to create value for 11.0% (1) )
the period plus dividends our shareholders through (1) Comparative for
paid. our portfolio and to 2020 has been prepared
deliver a secure and using EPRA NTA.
growing income stream.
The Company's medium-term
Total Return target set
at IPO is 9% per annum
by reference to the IPO
issue price.
The Company decided to
change its primary metrics
from EPRA NRV to EPRA
NTA.
---------------------------------- -----------------------------------------
3. Basic Net Asset Value Basic Net Asset Value EUR 1,053.5m
Net asset value in IFRS measures the net value EUR1.31/share as at
GAAP. of the Company under 30 September 2021 (EUR503.9m/
IFRS. EUR1.19/share as at
30 September 2020)
---------------------------------- -----------------------------------------
4. Adjusted Earnings Adjusted EPS reflects EUR24.7m
Post-tax adjusted EPS our ability to generate 4.61 cents/share
attributable to Shareholders, earnings from our portfolio, for the year ended
adjusted for other earnings which ultimately underpins 30 September 2021 (30
not supported by cash our dividend payments. September 2020: EUR17.6m/4.16
flows. cents/share)
See note 12 of the Financial
Statements.
---------------------------------- -----------------------------------------
5. Loan to value ratio The LTV measures the 13.3% at 30 September
("LTV") prudence of our financing 2021 (30 September 2020:
The proportion of our strategy, balancing the 41.1%(1) )
gross asset value that additional returns and
is funded by net borrowings portfolio diversification
(excluding cash). that come with using
debt against the need
to successfully manage
risk. The Company will
maintain a conservative
level of aggregate borrowings,
with a medium-term target
of 45% of gross asset
value and a maximum limit
of 50% (in each case,
calculated at the time
of borrowing).
The definition of LTV
has changed during the
year, aligning reporting
LTV and lenders LTV.
---------------------------------- -----------------------------------------
6. Weighted average unexpired The WAULT is a key measure 9.3 years at 30 September
lease term (WAULT) of the quality of our 2021 (30 September 2020:
The average unexpired portfolio. Long lease 9.1 years)
lease term of the property terms underpin the security
portfolio weighted by of our income stream.
annual passing rents. The Company seeks to
maintain a WAULT of greater
than five years across
the portfolio in accordance
with typical lease lengths
prevalent in Continental
Europe.
---------------------------------- -----------------------------------------
7. Dividend cover The dividend cover helps 80.2% for the year
Dividends paid and proposed indicate how sustainable ended 30 September 2021
to shareholders in relation a dividend is. It measures ( 30 September 2020:
to the financial period. the proportion of dividends 94.4%)
which is supported by
Adjusted Earnings.
The level of cover this
year is explained by
the two large equity
raises and the time to
deploy the geared proceeds.
---------------------------------- -----------------------------------------
8. Interest cover Interest cover is a measure 6.28 times for the
The ratio of net property of a company's ability year ended 30 September
income to the interest to meet its interest 2021 (30 September 2020:
incurred in the period. payments 4.63 times)
---------------------------------- -----------------------------------------
9. Like-for-like rental This measures the Company's 2.4%/EUR0.9m for the
growth ability to grow its rental year ended 30 September
Like-for-like rental income over time. Rental 2021 (30 September 2020:0.5%/EUR0.2m)
growth compares the growth growth will not be linear
of the rental income during the hold period,
of the portfolio that with different mechanisms
has been consistently in each lease agreement.
in operation and not Like-for-like rental
under development during growth includes rental
the two full preceding guarantees. Growth during
periods. the year was mainly driven
by the Bornem extension
which was completed in
September 2021,as well
as the letting in Strykow.
Excluding these asset
management initiatives,
like-for-like rental
growth was 0.80%.
---------------------------------- -----------------------------------------
(1) Comparatives for 30 September 2020 was 39.9% using the
previous LTV definition
EPRA PERFORMANCE MEASURES
The table below shows additional performance measures,
calculated in accordance with the Best Practices Recommendations of
the European Public Real Estate Association (EPRA). We provide
these measures to aid comparison with other European real estate
businesses. For a full reconciliation of the new EPRA NAV measures,
please see the Notes to the EPRA and Other Key Performance
Indicators.
Performance measures and Comments Performance
definition
1. EPRA Net Reinstatement A key measure to EUR1,147.4m
Value ("EPRA NRV") highlight the value EUR1.42/share as at
Basic NAV adjusted for of net assets on 30 September 2021 (30
mark-to-market valuation a long-term basis. September 2020: EUR550.5m/EUR1.30/share)
of derivatives, deferred The metric reflects
tax and transaction costs what would be needed
(real estate transfer to recreate the current
tax and purchaser's costs). portfolio of the
company.
------------------------------- --------------------------------------------
2. EPRA Net Tangible Assets Assumes that entities EUR1,086.5m
("EPRA NTA") buy and sell assets, EUR1.35/share as at
Basic NAV adjusted to thereby crystallising 30 September 2021 (30
remove the fair values certain levels of September 2020: EUR516.3m/EUR1.22/share)
of financial instruments unavoidable deferred
and deferred taxes. This tax.
excludes transaction costs.
------------------------------- --------------------------------------------
3. EPRA Net Disposal Value Represents the shareholders' EUR1,053.5m
("EPRA NDV") value under a disposal EUR1.31/share as at
Equivalent to IFRS NAV scenario, where deferred 30 September 2021 (30
as this includes the fair tax, financial instruments September 2020: EUR503.9m/EUR1.19/share)
values of financial instruments and certain other
and deferred taxes. adjustments are calculated
to the full extent
of their liability,
net of any resulting
tax.
------------------------------- --------------------------------------------
4. EPRA Earnings A key measure of EUR14.7m
Earnings from operational the Company's underlying 2.75 cents/share for
activities. results and an indication the year ended 30 September
of the extent to 2021 (30 September
which current dividend 2020: EUR13.8m/3.26
payments are supported cents/share)
by earnings.
------------------------------- --------------------------------------------
5. EPRA Net Initial Yield This measure should 3.7% as at 30 September
("NIY") make it easier for 2021 (30 September
Annualised rental income investors to judge 2020: 4.4%)
based on the cash rents for themselves how
passing at the balance the valuations of
sheet date, less non-recoverable portfolios compare.
property operating expenses,
divided by the market
value of the property,
increased with (estimated)
purchasers' costs.
------------------------------- --------------------------------------------
6. EPRA 'Topped-up' NIY This measure should 3.8% as at 30 September
This measure incorporates make it easier for 2021 (30 September
an adjustment to the EPRA investors to judge 2020: 4.6%)
NIY in respect of the for themselves how
expiration of rent-free the valuations of
periods (or other unexpired portfolios compare.
lease incentives such
as discounted rent periods
and step rents).
------------------------------- --------------------------------------------
7. EPRA Vacancy Rate A "pure" (%) measure 3.3% for the year
Estimated Market Rental of investment property ended to 30 September
Value ("ERV") of vacant space that is vacant, 2021 (30 September
space divided by ERV of based on ERV, and 2020: 5.4%)
the whole portfolio. including natural
guarantees.
During the year,
all vacant space
was covered by rental
guarantees.
------------------------------- --------------------------------------------
8. EPRA Cost Ratio A key measure to 30.5% (1) for the
Administrative and operating enable meaningful 12 months to 30 September
costs (including and excluding measurement of the 2021 (30 September
costs of direct vacancy) changes in a company's 2020: 31.3%(1) )
divided by gross rental operating costs. 29.6% (2) for the
income. 12 months to 30 September
2021 (2020: 31.0%(2)
)
------------------------------- --------------------------------------------
(1) Inclusive of vacant property costs
(2) Exclusive of vacant property costs
(3) Adjusted EPRA Cost Ratio inclusive of vacant property costs
for the 12 months to 30 September 2021 was 28.5% (2020: 27.8%).
(4) Adjusted EPRA Cost Ratio exclusive of vacant property costs
for the 12 months to 30 September 2021 was 27.6% (2020: 27.6%).
PRINCIPAL RISKS AND UNCERTAINTIES
The Board has overall responsibility for risk management and
internal controls, with the Audit Committee reviewing the
effectiveness of the risk management process on our behalf.
We aim to operate in a low-risk environment, focusing on the
Continental European logistics real estate sector to deliver an
attractive capital return and secure income for Shareholders. The
Board recognises that effective risk management is key to the
Group's success. Risk management ensures a defined approach to
decision making that decreases uncertainty surrounding anticipated
outcomes, balanced against the objective of creating value for
Shareholders.
Approach to managing risk
Our risk management process is designed to identify, evaluate,
understand and mitigate (rather than eliminate) the significant
risks we face. The process can, therefore, only provide reasonable,
and not absolute, assurance. As an investment company, we outsource
key services to the Manager, the Administrator and other service
providers, and rely on their systems and controls. The Manager has
established its own Risk Committee which ensures consistency and
transfer of best practice in reporting, monitoring and controlling
risk.
At least three times a year, the Board undertakes a formal risk
review, with the assistance of the Audit Committee, to assess the
effectiveness of our risk management and internal control systems.
During these reviews, the Board has not identified or been advised
of any failings or weaknesses which it has determined to be
material.
Risk appetite
We have a specific Investment Policy, which we adhere to and for
which the Board has overall responsibility.
Our risk appetite is low, and in particular, we do not undertake
any fully speculative development. We have high-quality tenant
partners, with a portfolio of modern buildings and one of the
longest unexpired lease terms in the sector, coupled with an
average term to maturity on our debt of four years, all subject to
interest rate derivative caps.
Principal risks and uncertainties
Further details of our principal risks and uncertainties are set
out below. They have the potential to affect our business
materially, either favourably or unfavourably. Some risks are
currently unknown, while others that we currently regard as
immaterial, and have therefore not included here, may turn out to
be material in the future. The Board also continually reviews and
assesses emerging risks, and has a process in place to decide their
inclusion as Principal risks.
PRINCIPAL RISKS
The matrix below illustrates our assessment of the impact and
probability of the principal risks identified, the rationale for
which is contained within the commentary for each risk
category.
Covid-19 risks Financial risks
1. The Covid-19 pandemic severely 9. Interest rates may fluctuate.
impacting the global economy and 10. Debt funding at appropriate
financial market may cause loss rates may not be available.
to the Company. 11. Debt covenants may be breached.
Property risks Taxation risks
2. Tenants may default. 12. A change in the Company's
3. The value of the property portfolio investment trust status may cause
may fluctuate. loss.
4. Portfolio growth may slow. 13. Changes to local tax legislation
5. Lack of diversification may in countries in which the Company
amplify local risks. is invested may cause loss.
6. Development activities may not
be profitable. Political risks
14. General political and/or economic
Operational risks uncertainty may disrupt the Company's
7. The Company is reliant on the business.
continuing services provided by
the Manager. ESG risks
8. Insurance at appropriate premiums 15. ESG risks and inability to
may not be available capitalise on the opportunities
could lead to loss of competitive
advantage, higher vacancies and
higher operating costs for the
Company and its tenants.
COVID-19 RISKS
1. The Covid-19 pandemic severely impacting the global economy
and financial market may cause loss to the Company
Probability Impact Mitigation
------------------------------- -----------------------------------
Medium Low The global economy Health and safety guidelines
and financial markets have been issued by the
have been impacted by Manager of the Company,
the Covid-19 pandemic. our asset managers and
This has had an adverse tenants to all employees
effect on the magnitude to ensure they are in a
and/or likelihood of safe working environment
several of the principal and that they are aware
risks, with the following of all symptoms of the
potential consequences: virus. All staff conducted
-- a potential impact checks to confirm they
on the short-term operations were able to work from
of the business due home remotely to safeguard
to staff working remotely the undisrupted continued
or potential absences operation of the business
because of the virus. and training has been undertaken
This includes the operation by all employees to make
of both our asset managers them aware of the potential
and tenants whose staff increased risk in cyber-crime.
could be at a health Over the previous 12 months
and safety risk through the Company has collected
the continued operation 100% of contracted rents.
of the warehouses. There Property valuations continue
is also an increased to increase, as the European
risk in cyber-crime logistics market remains
due to remote working. strong, in part aided by
-- an overall reduction the focus on the sector
in revenue due to the as a result of COVID-19.
default of one or more
of our tenant partners,
which could affect our
ability to pay dividends
to Shareholders and/or
lead to a breach in
our banking covenants.
-- tenants requesting
rent deferrals and therefore
impacting the capacity
of the Company to pay
target dividend in the
current period. -- an
adverse change in our
property valuations
which may lead to a
decrease in our Net
Asset Value and affect
our ability to meet
our target returns.
The significant volatility
in equity markets could
cause a decrease in
the share price, potentially
causing a breach in
banking covenants, which
may force us to sell
assets to repay loan
commitments.
------------------------------- -----------------------------------
PROPERTY RISKS
2. Tenants may default
Probability Impact Mitigation
---------------------------------------- -------------------------------------
Low to Medium Low to Medium We select assets with strong
The default of one or property fundamentals (location
more of our tenant partners close to population centres,
would reduce revenue access to infrastructure
from the relevant asset(s). and energy supply), which
There may be a continuing should be attractive to
reduction in revenues other tenants if the current
until we find a suitable tenant partner fails. In
replacement tenant, addition, while we focus
which may affect our on tenant partners with
ability to pay strong financial
dividends to Shareholders covenants, we also negotiate
and/or lead to a breach various guarantees or deposits,
in our banking covenants. to enable us to cover income
while looking for a new
tenant.
While the Group has a restriction
on the exposure to any
one tenant of 25% of total
rental income calculated
at the time of investment,
our Investment Policy requires
us to deliver a high-quality,
diversified Portfolio,
hence it is not expected
that this limit will be
breached. The current highest
tenant exposure is to Mango
at 14% of rent.
---------------------------------------- -------------------------------------
3. The valuation of the property portfolio may fluctuate
Probability Impact Mitigation
---------------------------------------- -------------------------------------
Low to Medium Medium Property valuation As at 30 September 2021,
is inherently subjective our property portfolio
and uncertain, and the was 100% cash generating
appraised value of our from leases, and rental
properties may not accurately guarantees, with long unexpired
reflect the current weighted average lease
or future value of the terms of 9.3 years and
Group's assets. In addition, a strong tenant partner
our due diligence may base. 95% of leases (by
not identify all risks income) include indexation
and liabilities in respect uplifts (with different
of a property acquired, features in each country).
leading to, among other Combined with the fact
things, an adverse change that we focus on the best
in the future valuation locations, where land supply
of that asset. An adverse is tight, and undertake
change in our property significant due diligence
valuation may lead to using the services of relevant
a decrease in our Net third parties, we believe
Asset Value and affect these factors reduce the
our ability to meet risk of significant adverse
our target returns. property valuation movements.
In an extreme scenario,
it could also lead to
a breach of our banking
covenants, which may
force us to sell assets
to repay loan commitments.
---------------------------------------- -------------------------------------
4. Portfolio growth may slow
Probability Impact Mitigation
---------------------------------------- -------------------------------------
Medium Medium Our business model is based
The fundamentals of on undertaking predominantly
the prime logistics off-market transactions,
locations in Continental sourced through the Manager's
Europe mean that the network of contacts across
availability of land Europe, and through our
suitable for large logistics partnership with local
properties is limited. development companies.
In addition, the European The Manager has also developed
logistics sector currently strong relationships with
attracts a range of a number of vendors and
investors. This results tenants in the industry.
in acquisition yields Our reliability, experience
that are currently at and speed of execution
record lows. gives us an edge over many
This may restrict our other potential investors.
ability to secure suitable In addition, the increase
logistics real estate in the capital value of
assets in targeted countries our portfolio as a result
in Continental Europe, of both the market dynamics
in order to grow our and our asset management
portfolio while maintaining initiatives, is expected
our target returns. to have a positive impact
on returns for Shareholders.
---------------------------------------- -------------------------------------
5. Lack of diversification may amplify local risk
Probability Impact Mitigation
---------------------------------------- -------------------------------------
Low Low Our Investment Policy Our Investment Policy requires
includes restrictions us to deliver a high-quality,
relating to the Group's diversified portfolio of
exposure to individual assets. While we adopt
assets or tenant partners a "bottom up" approach
and includes limited in the selection of real
restrictions relating estate investments, we
to our exposure to individual also consider the impact
countries. Significant on the concentration of
economic and/or political risk within our portfolio,
changes affecting a including the Group's exposure
country the Group has to any single country (considering
invested in, or the its economic and political
Eurozone generally, stability) at the time
could have an adverse of investment. Specifically,
impact on the income the Investment Policy restricts
derived from investments our ability to invest more
within said country than 20% of Gross Assets
and, hence, on the valuation (in aggregate) in Austria,
of those assets. This Czech Republic, Portugal
could lead to weaker and Slovakia, and restricts
overall portfolio performance, any single asset from comprising
both in terms of revenue more than 25% of Gross
generation and value. Assets at the time of investment.
---------------------------------------- -------------------------------------
6. Development activities may not be profitable
Probability Impact Mitigation
---------------------------------------- -------------------------------------
Low Low Any forward funded As at 30 September 2021,
developments are likely there are three forward
to involve a higher funding developments in
degree of risk than the portfolio. Any risk
is associated with standing of investment into these
investments. This could forward funded projects
include general construction is low, as the developer
risks, delays in the takes on the construction
development or the development risk and the risk of cost
not being completed, overruns. Funds for forward
cost overruns or developer/contractor funded developments remain
default. If any of the with us and are only released
risks associated with to the developer on a controlled
our developments materialised, basis, subject to milestones
this could reduce the as assessed by our independent
value of these assets project monitoring surveyors.
and our portfolio.
---------------------------------------- -------------------------------------
OPERATIONAL RISK
7. The Company is reliant on the continuing services provided
by the Manager
Probability Impact Mitigation
------------------------------- -------------------------------------
Low High We continue to Unless there is a default,
rely on the Manager's either party may terminate
services and its reputation the Investment Management
in the property market, Agreement by giving not
as well as the performance less than 24 months' written
and reputation of the notice. The Management
asset managers appointed Engagement Committee monitors
by the Manager (currently and regularly reviews the
LCP, Dietz, Verdion Manager's performance,
and NCAP). As a result, as well as the performance
the Group's performance of the key third-party
will, to a large extent, service providers to the
depend on the Manager's Group. In addition, the
abilities to source Board meets regularly with
adequate assets, and the Manager to ensure it
to actively manage these maintains a positive working
assets, relying on the relationship.
local knowledge of the
asset managers, where
necessary. Termination
of the Investment Management
Agreement would severely
affect the Company's
ability to manage our
operations and may have
a negative impact on
the Company's share
price.
8. Insurance at appropriate premiums may not be available
Probability Impact Mitigation
------------------------------- -------------------------------------
Medium High The Company relies The Manager uses an established
on the Manager's experience broker in order secure
in sourcing insurance insurance for the Company's
in order to ensure assets assets. The broker has
are covered to the adequate relationships with a range
level. Through both of insurers which supports
the impacts of COVID-19 both the ability to source
and the dynamics of insurance, and the competitiveness
the insurance market, of pricing. The most recent
it has become harder renewal was completed in
to secure insurance October 2021 this cover
for the Company's assets is in place until October
at appropriate pricing 2022. The Manager uses
levels. The rising cost a block policy which covers
of insurance may impact all of the assets under
upon shareholder returns. its management, and therefore
In an extreme scenario, insures a significant scale
the Company may not of assets which assists
be able to insure its in competitive pricing.
assets at all which If insurance was unobtainable
would create significant for a particular asset,
financial and operational there may be opportunity
risk. for the Manager to obtain
cover on a limited cover
basis or potentially the
Tenant may be able to procure
the insurance cover, or
alternatively a sale strategy
could be explored in order
to manage risk.
------------------------------- -------------------------------------
FINANCIAL RISKS
9. Interest rates may fluctuate
Probability Impact Mitigation
--------------------------------- ---------------------------------
Medium to High Low Interest on our The Company has entered
revolving credit ("RCF") into interest rate derivatives
facility is payable to hedge our direct exposure
based on a margin over to movements in Euribor.
Euribor. Any adverse These derivatives cap our
movement in Euribor exposure to the level to
could affect our profitability which Euribor can rise
and ability to pay dividends and have terms coterminous
to Shareholders. with the loans. We aim
to minimise the level of
unhedged debt whilst also
considering the average
level of draw down on the
RCF. During 2021, the Company
issued a Green Bond for
EUR500m. Bond debt carry
a fixed coupon which does
not expose the Company
to interest rate fluctuation.
--------------------------------- ---------------------------------
10. Debt funding at appropriate rates may not be available
Probability Impact Mitigation
--------------------------------- ---------------------------------
Low Medium Without sufficient The Company has in place
debt funding, we may long-term unsecured debt
be unable to pursue with five major financial
suitable investment institutions, and has recently
opportunities in line issued EUR500m bond on
with our investment the debt capital market.
objectives. This may This demonstrates the capacity
impair our ability to of the Manager to source
reach our targeted returns adequate debt, and the
and our ability to grow. appetite from lenders to
lend to the Company. During
the year, the Group obtained
an Investment Grade credit
rating which provides access
to a wider range of financing
options.
--------------------------------- ---------------------------------
10. Debt covenants may be breached
Probability Impact Mitigation
--------------------------------- ---------------------------------
Low to Medium Medium If we were unable We continually monitor
to operate within our our debt covenant compliance
debt covenants, this and perform stress tests.
could lead to a default We have significant headroom
and our debt funding before there is a risk
being recalled. This of a breach and our covenants
may result in us selling have a soft breach feature,
assets to repay loan which enables the Manager
commitments. to act and remedy in case
of breach.
--------------------------------- ---------------------------------
TAXATION RISKS
12. A change in the Company's investment trust status may cause
loss
Probability Impact Mitigation
----------------------------- ---------------------------------
Low to Medium Medium If the Company The Board is ultimately
fails to maintain approval responsible for ensuring
as an Investment Trust, we adhere to the UK Investment
its income and gains Trust regime and we monitor
will be subject to UK strict adherence to the
corporation tax and relevant regulations. We
it will be unable to have also engaged top-tier
designate dividends third-party tax advisers
as interest distributions. to help monitor our compliance
requirements.
----------------------------- ---------------------------------
13. Changes to local tax legislation in countries in which the
Company is invested may cause loss
Probability Impact Mitigation
----------------------------- ---------------------------------
Medium Low A change in local The Board relies on top-tier
taxation status or tax third-party providers to
legislation in any of advise on any tax changes
the countries we invest in every country in which
in may lead to increased we invest. In addition,
taxation of the Group the Group has been structured
and have a negative on a conservative basis,
impact on the Company's with reasonable internal
profits and returns debt ratios, in line with
to Shareholders. international transfer
pricing requirements.
----------------------------- ---------------------------------
POLITICAL RISKS
14. General political and/or economic uncertainty may disrupt
the Company's business
Probability Impact Mitigation
---------------------------- ----------------------------------
Low Low Political and economic The Group has currently
uncertainty can lead Investment Properties in
to weakened economic 7 different countries within
growth which can lead the EU. This diversification
to reduced demand for reduces the risk of significant
logistics warehouse political and/or economic
and/or have an impact uncertainties materially
on the Group's tenants. impacting the Group.
---------------------------- ----------------------------------
ESG RISKS
15. ESG risks and inability to capitalise on the opportunities
could lead to loss of competitive advantage, higher vacancies
and higher operating costs for the Company and its tenants
Probability Impact Mitigation
--------------------------------------------------------------- -------------------------------------
High Medium The Company's sustainability
The World Economic Forum strategy addresses all the
(WEF) listed ESG risks key risks for the Company
as 4 out of 7 of its in its operations. It provides
top risks in 2021. guidance to the Board and
There are several ESG Manager to reduce ESG risks
risks potentially impacting to create value for all
the Company. its stakeholders, including
* Climate change and biodiversity loss are the investing in more ESG focussed
principle environmental risks affecting the Company's assets, delivering lower
long term ability to operate in its markets. operating costs for tenants
and more secure returns
for investors.
* The ability for our tenants to source and retain the We ensure the assets we
right labour skills and mitigating modern slavery in invest in are well located
our supply chains, are the key social risks. for labour supply and the
Company is developing initiatives
to support local employment
* The ability to be transparent and agile in managing opportunities.
the evolving governance risks, such as diversity and The Board of Directors and
human capital management. the Manager have undertaken
ESG training to ensure they
have the right awareness
and skills to manage ESG
risks and opportunities.
--------------------------------------------------------------- -------------------------------------
EMERGING RISKS
As well as the Principal risks, the Directors have identified a
number of emerging risks which are considered as part of the formal
risk review. Emerging risks encompass those that are rapidly
evolving, for which the probability or severity are not yet fully
understood. As a result, any appropriate mitigations are also still
evolving, however, these emerging risk are not considered to pose a
material threat to the Company in the short term. These emerging
risks are raised as part of the bi-annual risk assessment where the
effects on the Group are considered. The emerging risks that could
impact the Company's performance cover a range of subjects which
include but are not restricted to climate change, sustainability
and technological advancement. The Audit & Risk Committee has
also considered emerging risks following Covid-19 such as changes
in the regulatory environment or tax regimes as a result of the
pandemic.
GOING CONCERN AND VIABILITY STATEMENT
The Group's cash balance as at 30 September 2021 was EUR329.7
million. It also had undrawn amounts under its debt facilities of a
further EUR250.0 million. Of the Group's total facilities (both RCF
and the Green Bond), EUR58.8 million matures in 2023, EUR191.2
million in 2025 and EUR500 million in 2026. The higher than usual
cash balance as at the year end is a result of the Group's
successful equity raise of EUR250 million in September 2021.
The Group currently has substantial headroom against its
borrowing covenants, with an LTV of 13% as at 30 September 2021
against a borrowing covenant limit of 65%. The Group's borrowings
are unsecured, providing it with a deeper pool of liquidity and
with more flexibility over its arrangements.
The Group also benefits from a secure income stream from leases
with long average unexpired terms, which are not overly reliant on
any one tenant. This diversification mitigates the risk of tenant
default. As a result, the Directors believe that the Group is well
placed to manage its current and future financial commitments and
other business risks.
Having reviewed the Group's cash flow forecasts, which show that
liabilities can be met as they fall due, the Directors believe that
there are currently no material uncertainties in relation to the
Group's ability to continue for a period of at least 12 months from
the date of approval of the financial statements. The Board is,
therefore, of the opinion that the going concern basis adopted in
preparing the Annual Report is appropriate.
Assessment of viability
The period over which the Directors consider it feasible and
appropriate to report on the Group's viability is the three-year
period to December 2024. There was no change to the period over
which the Directors assess viability.
The period for this assessment is the same three-year time
horizon as covered by the Group's financial forecasts and plans.
This is considered to be the optimum balance given the age of the
Group as well as the long term nature of investment in property.
The Directors confirm that they have no reason to expect any change
in the Group's viability immediately following the period
assessed.
The assumptions underpinning these forecast cash flows and
covenant compliance forecasts were sensitised, to explore the
Group's resilience to the potential impact of its significant
risks, or a combination of those risks. The principal risks
summarise those matters that could have a significant impact on the
Group's ability to remain in operation and meet its current
obligations.
While the principal risks assessed by the Directors could affect
the Group's business model, the Directors do not consider that they
have a reasonable likelihood of impacting the Group's viability
over the three-year period to December 2024.
The sensitivities performed were designed to be severe but
plausible and to take full account of the availability of
mitigating actions that could be taken to avoid or reduce the
impact or occurrence of the underlying risks to the forecast cash
flows. In the modelling, the Group also considered the likely
future capital expenditures, as well as the extensions on our
Spanish and Polish assets. The key risks considered, separately and
in combination, include:
1. an increase in Euribor;
2. a decrease in the value of the portfolio; and
3. Two key tenants default and are not replaced.
Viability Statement
The Directors confirm that they have carried out a robust
assessment of the principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency or liquidity.
Having considered the forecast cash flows and covenant
compliance, and the impact of the sensitivities in combination, the
Directors confirm that they have a reasonable expectation that the
Group will be able to continue in operation and meet its
liabilities as they fall due over the three-year period of their
assessment to December 2024.
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2021
Year ended Year ended
30 September 30 September
2021 2020
Note EURm EURm
Rental income 6 43.89 36.00
------- ---------------- ----------------
Service charge income 6 7.03 6.42
------- ---------------- ----------------
Other income 6 0.55 0.46
------- ---------------- ----------------
Gross property income 6 51.47 42.88
------- ---------------- ----------------
Direct property costs 7 (8.75) (7.40)
------- ---------------- ----------------
Net property income 42.72 35.48
------- ---------------- ----------------
Fair value gain on investment properties 14 106.46 38.57
------- ---------------- ----------------
Gain on disposal of investment property 7.33 0.83
------- ---------------- ----------------
Administrative and other expenses 8 (12.22) (10.73)
------- ---------------- ----------------
Operating profit 144.29 64.15
------- ---------------- ----------------
Net finance expense 10 (14.54) (10.57)
------- ---------------- ----------------
Effect of foreign exchange differences 8 (0.70) 0.03
------- ---------------- ----------------
Changes in fair value of interest rate
derivatives 20 (0.05) (0.03)
------- ---------------- ----------------
Profit before taxation 129.00 53.58
------- ---------------- ----------------
Taxation 11 (24.23) (8.79)
------- ---------------- ----------------
Profit for the year 104.77 44.79
------- ---------------- ----------------
Other comprehensive income
------- ---------------- ----------------
Foreign currency translation differences
- foreign operations 0.06 -
------- ---------------- ----------------
Total comprehensive income for the year
attributable to the Shareholders 104.83 44.79
------- ---------------- ----------------
Earnings Per Share (EPS) (expressed in
cents per share)
------- ---------------- ----------------
EPS - basic and diluted 12 19.59 10.60
------- ---------------- ----------------
GROUP STATEMENT OF FINANCIAL POSITION
For the year ended 30 September 2021
30 September 30 September
2021 2020
Note EURm EURm
---------------
Non-current assets
------- --------------- ---------------
Investment properties 14 1,281.38 837.90
------- --------------- ---------------
Derivative financial instruments 20 0.05 0.09
------- --------------- ---------------
Trade and other receivables 15 1.17 1.17
------- --------------- ---------------
Deferred tax assets 11 0.24 1.15
------- --------------- ---------------
Total non-current assets 1,282.84 840.31
------- --------------- ---------------
Current assets
------- --------------- ---------------
Trade and other receivables 15 17.24 14.72
------- --------------- ---------------
Cash and cash equivalents 16 329.73 24.44
------- --------------- ---------------
Total current assets 346.97 39.16
------- --------------- ---------------
Total assets 1,629.81 879.47
------- --------------- ---------------
Current liabilities
------- --------------- ---------------
Trade and other payables 17 (21.92) (9.29)
------- --------------- ---------------
Income tax liability (0.22) (0.34)
------- --------------- ---------------
Total current liabilities (22.14) (9.63)
------- --------------- ---------------
Non-current liabilities
------- --------------- ---------------
Trade and other payables 17 (1.40) (1.46)
------- --------------- ---------------
Loan notes and borrowings 18 (492.17) (340.63)
------- --------------- ---------------
Deferred tax liabilities 11 (33.30) (13.64)
------- --------------- ---------------
Other liabilities 19 (25.19) (8.89)
------- --------------- ---------------
Tenant deposit 23 (2.11) (1.31)
------- --------------- ---------------
Total non-current liabilities (554.17) (365.93)
------- --------------- ---------------
Total liabilities (576.31) (375.56)
------- --------------- ---------------
Net assets 1,053.50 503.91
------- --------------- ---------------
Equity
------- --------------- ---------------
Share capital 24 8.07 4.23
------- --------------- ---------------
Share premium reserve 597.46 131.24
------- --------------- ---------------
Translation reserve 0.06 -
------- --------------- ---------------
Retained earnings 447.91 368.44
------- --------------- ---------------
Total equity 1,053.50 503.91
------- --------------- ---------------
Net Asset Value (NAV) per share (expressed
in Euro per share)
------- --------------- ---------------
Basic NAV 25 1.31 1.19
------- --------------- ---------------
EPRA NTA (formerly EPRA NRV)(1) 25 1.35 1.22
------- --------------- ---------------
1. The Group has decided to adopt EPRA NTA as its primary EPRA
NAV measure, replacing the previously reported EPRA NRV.
The financial statements were approved by the Board of Directors
on 6 December 2021 and signed on its behalf by:
Robert Orr, Chairman, Company registration number: 11367705
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2021
Share Share Translation Retained
capital premium reserve earnings Total
Note EURm EURm EURm EURm EURm
--------------
At 1 October 2020 4.23 131.24 - 368.44 503.91
------- ----------- ----------- -------------- ------------ -----------
Net profit for the year - - - 104.77 104.77
------- ----------- ----------- -------------- ------------ -----------
Other comprehensive
income - - 0.06 - 0.06
------- ----------- ----------- -------------- ------------ -----------
Total comprehensive
income - - 0.06 104.77 104.83
------- ----------- ----------- -------------- ------------ -----------
Contributions and distributions:
------- ----------- ----------- -------------- ------------ -----------
New share capital subscribed 24 3.84 476.14 - - 479.98
------- ----------- ----------- -------------- ------------ -----------
Associated share issue
costs - (9.92) - - (9.92)
------- ----------- ----------- -------------- ------------ -----------
Dividends paid 13 - - - (25.30) (25.30)
------- ----------- ----------- -------------- ------------ -----------
Total contributions
and distributions 3.84 466.22 - (25.30) 444.76
------- ----------- ----------- -------------- ------------ -----------
At 30 September 2021 8.07 597.46 0.06 447.91 1,053.50
------- ----------- ----------- -------------- ------------ -----------
Retained
Share capital Share premium earnings Total
Note EURm EURm EURm EURm
At 1 October 2019 4.23 131.21 341.83 477.27
------- ---------------- ---------------- ------------ ----------
Net profit for the year - - 44.79 44.79
------- ---------------- ---------------- ------------ ----------
Total comprehensive income - - 44.79 44.79
------- ---------------- ---------------- ------------ ----------
Contributions and distributions:
------- ---------------- ---------------- ------------ ----------
Associated share issue
costs - 0.03 - 0.03
------- ---------------- ---------------- ------------ ----------
Dividends paid 13 - - (18.18) (18.18)
------- ---------------- ---------------- ------------ ----------
Total contributions and
distributions - 0.03 (18.18) (18.15)
------- ---------------- ---------------- ------------ ----------
At 30 September 2020 4.23 131.24 368.44 503.91
------- ---------------- ---------------- ------------ ----------
GROUP CASH FLOW STATEMENT
For the year ended 30 September 2021
For the For the
year ended year ended
30 September 30 September
2021 2020
Note EURm EURm
Cash flows from operating activities
------- ---------------- ----------------
Profit for the year 104.77 44.79
------- ---------------- ----------------
Gain on disposal of investment property (7.33) (0.83)
------- ---------------- ----------------
Changes in fair value of investment properties (106.46) (38.57)
------- ---------------- ----------------
Changes in fair value of interest rate
derivatives 0.05 0.03
------- ---------------- ----------------
Tax expense 24.23 8.79
------- ---------------- ----------------
Net finance expense 14.54 10.57
------- ---------------- ----------------
Accretion of tenant lease incentive 0.46 (3.56)
------- ---------------- ----------------
Amortisation of capital contribution and
lease commissions and decrement of rental
guarantee (1.01) 0.04
------- ---------------- ----------------
(Increase)/decrease in trade and other
receivables (4.07) 18.70
------- ---------------- ----------------
Increase/(decrease) in trade and other
payables 3.61 (6.48)
-------------------------------------------------- ------- ---------------- ----------------
Increase in other liabilities 5.27 -
-------------------------------------------------- ------- ---------------- ----------------
Cash generated from operations 34.06 33.48
------- ---------------- ----------------
Tax paid (3.77) (1.20)
-------------------------------------------------- ------- ---------------- ----------------
Net cash flow generated from operating
activities 30.29 32.28
------- ---------------- ----------------
Investing activities
------- ---------------- ----------------
Purchase of investment properties (366.47) (102.41)
------- ---------------- ----------------
Disposal of investment properties 64.30 -
------- ---------------- ----------------
Disposal of assets held-for-sale - 2.33
------- ---------------- ----------------
Improvements to investment properties
and development expenditure (17.83) (7.65)
------- ---------------- ----------------
Rental guarantee received 2.81 -
------- ---------------- ----------------
Net cash flow used in investing activities (317.19) (107.73)
------- ---------------- ----------------
Financing activities
------- ---------------- ----------------
Net proceeds from issue of Ordinary Share
capital 470.06 -
------- ---------------- ----------------
Loans received 18 676.45 120.26
------- ---------------- ----------------
Loans repaid 18 (524.00) (12.50)
------- ---------------- ----------------
Finance expense paid (5.76) (7.61)
------- ---------------- ----------------
Dividends paid to equity holders 13 (25.30) (18.18)
------- ---------------- ----------------
Net cash flow generated from financing
activities 591.45 81.97
------- ---------------- ----------------
Net movement in cash and cash equivalents
for the year 304.55 6.52
------- ---------------- ----------------
Cash and cash equivalents at start of
the year 24.44 17.90
------- ---------------- ----------------
Unrealised foreign exchange gains 0.74 0.02
------- ---------------- ----------------
Cash and cash equivalents at end of the
year 329.73 24.44
------- ---------------- ----------------
NOTES TO THE CONSOLIDATED ACCOUNTS
1. Corporate information
The consolidated financial statements of the Group for the year
ended 30 September 2021 comprise the results of Tritax EuroBox plc
("the Company") and its subsidiaries (together "the Group") and
were approved by the Board for issue on 6 December 2021. The
Company is a public limited company incorporated and domiciled in
England and Wales. The registered address of the Company is
disclosed in the Company Information.
The nature of the Group's operations and its principal
activities are set out in the Strategic Report.
The financial information presented here does not constitute the
company's statutory accounts for the periods ended 30 September
2021 or 2020 but is derived from those accounts. Statutory accounts
for period ended 30 September 2020 have been delivered to the
registrar of companies, and those for the year ended 30 September
2020 will be delivered in due course. The auditor has reported on
those accounts; their reports were (i) unqualified (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
Accounting policies
2. Basis of preparation
The consolidated financial statements have been prepared In
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 ('Adopted IFRS')
and the applicable legal requirements of the Companies Act 2006. In
addition, the Group financial statements are required under the UK
Disclosure and Transparency Rules 4.1.6, to be prepared in
accordance with International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union ("IFRSs as adopted by the EU"). The Group's
financial statements have been prepared on a historical cost basis,
as modified for the Group's investment properties and interest rate
derivatives, which have been measured at fair value through the
Group profit or loss.
The Group has chosen to adopt EPRA (European Public Real Estate
Association - www.epra.com/finance/financial-reporting/guidelines)
best practice guidelines for calculating key metrics such as net
tangible assets (NTA) and earnings per share. The Group has decided
to adopt EPRA NTA as its primary EPRA NAV measure, replacing the
previously reported EPRA NRV. These are disclosed in notes 12 and
25.
2.1. Going concern
The Directors have prepared cash flow forecasts for the Group
for a period of at least 12 months from the date of approval of the
consolidated financial statements. These forecasts include the
Directors' assessment of the impact of Covid-19 on the Group, and
plausible downside scenarios.
The Group's property portfolio is let to 27 tenants across over
15 properties in 7 European countries. The Group's largest tenant
represents 14% of contracted rent at 30 September 2021 and the top
5 tenants together represent 52% of contracted rent.
As at the date of approval of the consolidated financial
statements, the Group has not experienced a significant increase in
rent arrears compared to the equivalent period last year. The
Directors have considered the risk that further tenants either
request deferrals or become insolvent and hence no rent is paid.
The Directors have assessed each tenant's risk based on experience,
knowledge of the tenant and discussions to date on rent deferrals.
Following this assessment the Directors have modelled a severe but
plausible downside scenario, where they combined the default of two
key tenants and the failure to let voids, with a significant
increase in Euribor. The forecast shows that the Group will
continue to have sufficient cash resources to meet its liabilities
as they fall due, and will continue to meet its debt covenants,
which are set out in further detail below.
The Group's cash balance at 30 September 2021 was EUR329.73
million. It also had undrawn amounts under its unsecured revolving
credit facility ("RCF") of a further EUR250.0 million at the date
of approval of these financial statements. Of the Group's total
facilities (both RCF and the Green Bond), EUR58.8 million matures
in 2023, EUR191.2 million in 2025 and EUR500 million in 2026. The
loan includes financial covenants for loan-to-value ("LTV"),
interest cover ratio ("ICR") and gearing. These covenants have been
complied with throughout the year and up to the date of approval of
these financial statements.
The LTV covenant is measured quarterly based on the property
valuation as used in the consolidated financial statements. Based
on the most recent valuation the Group retained headroom against a
covenant limit, reporting 13% against the limit of 65%.
The gearing covenant is measured quarterly based on consolidated
total net borrowings to consolidated shareholders' funds. Based on
the most recent reporting the Group retained headroom against the
covenant limit, reporting 16% against the limit of 150%.
LTV and gearing covenants are measured using "Net Borrowings"
which reduces the drawn debt by the Group's cash holdings at each
measurement date.
The ICR covenant is measured as the ratio of the Group's
consolidated earnings before income and tax, subject to certain
adjustments, to consolidated net finance costs in respect of any
measurement period, by reference to accounting income. Based on the
most recent reporting the Group retained headroom against the
covenant limit, reporting 359% against the limit of 150%.
As a result of the above considerations the Directors forecast
that covenant compliance will continue for at least the next 12
months.
Consequently, the directors are confident that the Group and the
Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
3. Significant accounting judgements, estimates and assumptions
The preparation of the Group's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability
affected in future periods.
3.1. Judgements
In the process of applying the Group's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the consolidated
financial statements:
Business combinations
The Group acquires subsidiaries that own investment properties.
At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the
acquisition of an asset. Under the Definition of a Business
(Amendments to IFRS 3 "Business Combinations"), to be considered a
business an acquired set of activities and assets must include, at
a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs. The
optional 'concentration test' is also applied, where substantially
all of the fair value of gross assets acquired is concentrated in a
single asset (or a group of similar assets), the assets acquired
would not represent a business. Therefore, the Group accounts for
an acquisition as a business combination where an integrated set of
activities is acquired in addition to the property.
Where such acquisitions are not judged to be the acquisition of
a business, they are not treated as business combinations. Rather,
the cost to acquire the corporate entity is allocated between the
identifiable assets and liabilities of the entity based upon their
relative fair values at the acquisition date. Accordingly, no
goodwill or additional deferred tax relating to pre-acquisition
property valuation gains arises.
In the current and prior periods all acquisitions were accounted
for as asset acquisitions as none of the acquisitions included the
acquisition of an integrated set of activities.
Segment reporting
The Directors are of the opinion that the Group is engaged in a
single segment business, being the investment in European big box
assets. The Directors consider that these properties have similar
economic characteristics and as a result these individual
properties have been reported as a single operating segment.
3.2. Estimates
Fair valuation of investment property
The fair value of investment property is determined, by an
independent property valuation expert, to be the estimated amount
for which a property should exchange on the date of the valuation
in an arm's-length transaction. Properties have been valued on an
individual basis. The valuation expert uses recognised valuation
techniques, applying the principles of both IAS 40 and IFRS 13.
The valuations have been prepared in accordance with the Royal
Institution of Chartered Surveyors ("RICS") Valuation - Global
Standards January 2020 ("the Red Book"). Factors reflected include
current market conditions, annual rentals, lease lengths and
location. The significant methods and assumptions used by valuers
in estimating the fair value of investment property are set out in
note 14.
4. Summary of significant accounting policies
4.1. Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company up
to 30 September 2021.
Control is achieved when the Company is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee. For acquisitions not considered business combinations,
the cost of acquisition is allocated to the assets and liabilities
acquired based upon their relative fair values, and no goodwill or
deferred tax is recognised. Non-controlling interests are accounted
for in section 4.5.
For each of the subsidiaries within the Group with
non-controlling interests (see note 4 of the Company financial
statements), the Group has issued put options to the
non-controlling interest. The Group has adopted the anticipated
acquisition method under which the underlying interests of the
non-controlling interest are presented in the Group Statement of
Financial Position and the Group Statement of Comprehensive Income
as if they are already acquired by the Group.
The day-to-day operations of Fondo Minerva Eurobox Italy, are
managed by Savills IM, ("Savills") in accordance with the
requirements of the Italian REIF regime. The Company has the power
to replace Savills with another operator and therefore considers
the investment to be a subsidiary under IFRS 10.
The results of subsidiaries where control is acquired or
disposed of during the year are included in the Group profit or
loss from the effective date of acquisition or up to the effective
date of disposal, as appropriate. Where necessary, adjustments are
made to the financial statements of subsidiaries to bring the
accounting policies used in line with those of the Group.
All intercompany transactions and balances between Group
companies are eliminated on consolidation. These consolidated
financial statements include the financial statements of the
Company and the subsidiary companies as listed in note 4 of the
Company accounts.
4.2. Investment property and investment property under
construction
Investment property comprises completed property that is owned
or held under a lease to earn rentals or for capital appreciation,
or both, and property under development where the Group intends to
retain ownership on completion.
Investment property is recognised when the risks and rewards of
ownership have been transferred and is measured initially at cost
including transaction costs. The cost of investment property
includes potential payments under put options granted to
non-controlling interests of subsidiaries which own investment
property. Rent guarantees and top ups paid by a vendor to the Group
to compensate the Group for vacant space or rent free periods are
treated as part of the cost of the property acquired and offset the
initial purchase consideration. Such receipts are included in the
Group's Adjusted EPS in note 12. Transaction costs include transfer
taxes, professional fees for legal and other services and other
costs incurred in order to bring the property to the condition
necessary for it to be capable of operating. Subsequent to initial
recognition, investment property is stated at fair value. Gains or
losses arising from changes in the fair values are included in the
Group profit or loss.
Investment properties under construction are financed by the
Group where the Group enters into contracts for the development of
a pre--let property under a funding agreement. All such contracts
specify a fixed amount of consideration. The Group does not expose
itself to any speculative development risk as the proposed building
is pre--let to a tenant under an agreement for lease and the Group
enters into a fixed price development agreement with the developer.
Investment properties under construction are initially recognised
at cost (including any associated costs), which reflect the Group's
investment in the assets. Subsequently, the assets are remeasured
to fair value at each reporting date. The fair value of investment
properties under construction is estimated as the fair value of the
completed asset less any costs still payable in order to complete,
which include an appropriate developer's margin.
Additions to properties include costs of a capital nature only.
Expenditure is classified as capital when it results in
identifiable future economic benefits, which are expected to accrue
to the Group. All other property expenditure is expensed in the
Group profit or loss as incurred.
The corresponding entry upon recognising lease incentives or
fixed/minimum rental uplifts is made to investment property. For
further details please see Accounting Policy note 4.8.1.
Investment properties cease to be recognised when they have been
disposed of or withdrawn permanently from use and no future
economic benefit is expected from disposal. The difference between
the net disposal proceeds and the carrying amount of the asset at
the point of disposal is recognised in the Group profit or loss in
the year of retirement or disposal.
4.3. Assets held-for-sale
A non-current asset or disposal group is classified as held for
sale if it is highly probable that its carrying amount will be
recovered principally through a sale transaction instead of through
continuing use. Such assets, or disposal groups are generally
measured at the lower of the carrying amount and fair value less
costs to sell and once classified as held-for-sale, the asset is no
longer amortised or depreciated. Investment property that is
classified as held for sale is held at fair value.
4.4. Financial instruments
Fair value hierarchy
Level 1: Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
reassessing categorisation at the end of each reporting period.
4.4.1. Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired. The Group's accounting policy for each category
is as follows:
Derivative financial instruments
Derivative financial instruments refer to interest rate caps
purchased for hedging purposes which are initially recognised at
fair value plus costs of acquisition and are subsequently measured
at fair value. The Group does not apply hedge accounting and hence
the gain or loss at each fair value remeasurement date is
recognised in the profit or loss.
Amortised cost
The Group's financial assets measured at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
Consolidated Statement of Financial Position.
These assets arise principally from the provision of goods and
services to customers (e.g. trade receivables), but also
incorporate other types of financial assets where the objective is
to hold these assets in order to collect contractual cash flows
which are solely payments of principal and interest. They are
initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue and are
subsequently carried at amortised cost being the effective interest
rate method, less provision for impairment.
Impairment provisions for current and non--current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses. During this process the
probability of the non--payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss disclosed in the
Group profit or loss. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Cash and cash equivalents include cash in hand, deposits held at
call with banks and other short-term highly liquid investments with
original maturities of three months or less.
4.4.2. Financial liabilities
The Group classifies its financial liabilities as amortised
cost.
The Group's accounting policy for each type of financial
liability is as follows:
Loans and borrowings
Loans and bank borrowings are initially recognised at fair value
net of any transaction costs directly attributable to the issue of
the instrument. Such interest-bearing liabilities are subsequently
measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the year to
repayment is at a constant rate on the balance of the liability
carried in the Group Statement of Financial Position. For the
purposes of each financial liability, interest expense includes
initial transaction costs and any premium payable on redemption, as
well as any interest or coupon payment while the liability is
outstanding.
Extensions of bank borrowings under accordion options in the
original facility agreement are treated as changes in estimated
cash flows under the original financial liability.
Other non-derivative financial liabilities
Non-derivative financial liabilities are recognised initially at
the date that the Group becomes a party to the contractual
provisions of the instrument and are measured initially at fair
value less initial direct costs and subsequently measured at
amortised cost. The Group derecognises a financial liability when
its contractual obligations are discharged or cancelled or
expire.
4.5. Put option liabilities
Liabilities for put options held by non-controlling interests
are initially and subsequently recognised at the present value of
the exercise price of the option. This is taken to be the
non-controlling interest's proportionate share of the current fair
value of investment property, the carrying amount of other net
assets plus the present value of anticipated payments to be made by
the Group under dividend guarantees to the non-controlling
interest.
Changes in the carrying amount of the put liability are
recognised within finance expenses in the Group Statement of
Comprehensive Income.
4.6. Forward funded pre--let investments
The Group enters into forward funding development agreements for
pre--let investments. The Group will enter into a forward funding
agreement with a developer and simultaneously enter into an
agreement for lease with a prospective tenant willing to occupy the
building once complete.
During the period between initial investment in a forward funded
agreement and the rent commencement date under the lease, the Group
usually receives licence fee income. Usually this is payable by the
developer to the Group throughout this period and typically
reflects the approximate level of rental income that is expected to
be payable under the lease, as and when practical completion is
reached. IAS 40.20 states that investment property should be
recognised initially at cost, being the consideration paid to
acquire the asset, therefore such licence fees are deducted from
the cost of the investment and are shown as a receivable.
4.7. Dividends payable to Shareholders
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the Shareholders
at an Annual General Meeting.
4.8. Property income
4.8.1. Rental income
Rental income arising from operating leases on investment
property is accounted for on a straight--line basis over the lease
term and is included in gross rental income in the Group profit or
loss. The lease term is the non--cancellable period of the lease.
Tenant break clauses are assumed to be exercised unless it is
reasonably certain at inception of the lease that the break will
not be exercised. Tenant lease incentives are recognised as a
reduction of rental revenue on a straight--line basis over the term
of the lease. Included in the straight-line basis are the effects
of future fixed or minimum uplifts. Any contingent rental uplifts
are excluded until the amounts are known. Initial direct costs
incurred in negotiating and arranging an operating lease are
recognised as an expense over the lease term on the same basis as
the lease income. Rental income is invoiced, either monthly or
quarterly in advance, and for all rental income that relates to a
future period, this is deferred and appears within current
liabilities on the Group Statement of Financial Position.
Amounts received from tenants to terminate leases or to
compensate for dilapidations are recognised in the Group profit or
loss when the right to receive them arises.
When the Group enters into a forward funded transaction, the
future tenant signs an agreement for lease. No rental income is
recognised under the agreement for lease; once practical completion
has taken place and the formal lease is signed, rental income
commences to be recognised in the Group profit or loss.
4.8.2. Service charges and other income
Income arising from expenses recharged to tenants is recognised
in the period in which the compensation becomes receivable. Service
charge and insurance premiums and other such receipts are included
in the gross property income gross of the related costs, as the
Directors consider that the Group acts as principal in this
respect.
4.9. Finance income
Finance income is recognised as interest accrues on cash
balances held by the Group. Interest charged to a tenant on overdue
rental income is also recognised within finance income.
4.10. Finance costs
Finance costs consist of interest and other costs that the Group
incurs in connection with bank and other borrowings, and the
holding of deposits in Euro bank accounts. All interest costs are
expensed to the Group profit or loss in the period in which they
occur on an effective interest basis and all loan issue costs paid
are offset against amounts drawn on the facilities and are
amortised over the term of the facilities.
The Group has elected not to capitalise interest on investment
properties under development.
4.11. Taxation
The Company is approved by HMRC as an investment trust under
Section 1158 of the Corporation Tax Act 2010.
In respect of each accounting period for which the Company
continues to be approved by HMRC as an investment trust, the
Company will be exempt from UK taxation on its capital gains. The
Company is, however, liable to UK corporation tax on its
income.
The Company should in practice be exempt from UK corporation tax
on dividend income received, provided that such dividends (whether
from UK or non-UK companies) fall within one of the "exempt
classes" in Part 9A of the CTA 2009. The Company is also able to
elect to take advantage of modified UK tax treatment in respect of
its "qualifying interest income" for an accounting period referred
to as the "streaming" regime. Under regulations made pursuant to
the Finance Act 2009, the Company may designate as an "interest
distribution" all or part of the amount it distributes to
shareholders as dividends, to the extent that it has "qualifying
interest income" for the accounting period. If the Company
designates any dividend it pays in this manner, it is able to
deduct such interest distributions from its income in calculating
its taxable profit for the relevant accounting period.
The Company's status as an approved investment trust does not
impact the taxation of its subsidiaries or the Group's liability to
tax in the other countries in which the Group operates.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from "profit before tax" as reported
in the Consolidated Statement of Comprehensive Income because of
items of income or expense that are taxable or deductible in other
years and items that are never taxable or deductible. The Group's
current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting year.
Where corporation tax arises in subsidiaries, these amounts are
charged to the Consolidated Statement of Comprehensive Income. The
current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the date of the balance
sheet in the countries where the Group operates.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition (other than in a business combination)
of assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit. In addition, deferred tax
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill.
Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the year in which the liability
is settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the
reporting year.
The carrying values of the Group's investment properties are
assumed to be realised by sale at the end of use. The capital gains
tax rate applied is that which would apply on a direct sale of the
property recorded in the Consolidated Balance Sheet regardless of
whether the Group would structure the sale via the disposal of the
subsidiary holding the asset, to which a different tax rate may
apply. The deferred tax is then calculated based on the respective
temporary differences and tax consequences arising from recovery
through sale.
Provision
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, that can be reliably measured, and it is probable that
an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects risks specific to
the liability.
4.12 Foreign currency translation
The presentation currency of the Company is Euro. Each entity in
the Group determines its own functional currency and items included
in the financial statements of each entity are measured using that
functional currency. All entities in the Group, with the exception
of Sweden, have Euro as the functional currency.
The assets and liabilities of Sweden are translated to the
Group's presentational currency, Euro, at foreign exchange rates
ruling at the balance sheet date. The revenues and expenses of
foreign operations are translated at an average rate for the year
where this rate approximates to the foreign exchange rates ruling
at the dates of the transactions. Exchange differences arising from
this translation of foreign operations are reported as an item of
other comprehensive income and accumulated in the translation
reserve.
Non-monetary assets and liabilities carried at fair value that
are denominated in foreign currencies are translated at the rates
prevailing on the date that the fair value was determined. Gains
and losses arising on exchange are included in the profit or loss
for the year, except for exchange differences arising on
non-monetary assets and liabilities where the changes in fair value
are recognised directly to equity, and any exchange component of
that gain and loss is also recognised directly to equity.
5. Standards in issue
5.1. Standards in issue and effective from 1 October 2020
Amendments to IFRS 3 "Business Combinations", definition of a
business
The amendment provides a revised framework for evaluating a
business, and introduces an optional "concentration test" and
impacts the assessment and judgements used in determining whether
future property transactions represent an asset acquisition or
business combination. As a result of the amendment, all property
transactions during the year were treated as asset acquisitions as
substantially all of the fair value of the gross assets is
concentrated in a single identifiable asset or a group of similar
identifiable assets.
Amendments to References to the Conceptual Framework in IFRS
Standards were endorsed by the European Commission for use in the
European Union. The Amendments update some of the references and
quotations in IFRS Standards and Interpretations so that they refer
to the revised Conceptual Framework or specify the version of the
Conceptual Framework to which they refer. There was no impact or
changes in the accounting policies from the amendments.
There was no material effect from the adoption of other
amendments to IFRS effective in the year. They have no impact to
the Group significantly as they are either not relevant to the
Group's activities or require accounting which is consistent with
the Group's current accounting policies.
5.2. New standards issued but not yet effective
Amendments to IAS 1 on Classification of Liabilities as Current
or Non-Current are effective for the financial years commencing on
or after 1 January 2023 and are to be applied retrospectively. It
is not expected that the amendments may have an impact on the
presentation and classification of liabilities in the Group
Statement of Financial Position based on rights that are in
existence at the end of the reporting period.
Definition of Accounting Estimates (Amendments to IAS 8) is
effective for annual periods beginning on or after 1 January 2023
to help entities to distinguish between accounting policies and
accounting estimates. The amendments are for changes in accounting
policies and changes in accounting estimates that occur on or after
the start of that period. It is not expected that the amendments
may have an impact on the consolidated financial statements of the
Group.
There are other new standards and amendments to standards and
interpretations which have been issued that are effective in future
accounting periods, and which the Group has decided not to adopt
early. None of these are expected to have a material impact on the
consolidated financial statements of the Group.
6. Gross property income
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Rental income 41.58 32.48
---------------- ----------------
Spreading of tenant incentives 2.62 3.56
---------------- ----------------
Amortisation of capital contribution and lease
commission (0.31) (0.04)
---------------- ----------------
Gross rental income 43.89 36.00
---------------- ----------------
Service charges recoverable 7.03 6.42
---------------- ----------------
Other income 0.55 0.46
---------------- ----------------
Gross property income 51.47 42.88
---------------- ----------------
The Group derives property income from the following
countries:
Gross property
income (EURm) Belgium Germany Spain Italy Poland The Netherlands Sweden Total
--------
30 September 2021 6.27 19.32 9.30 7.06 6.77 2.19 0.56 51.47
---------- ---------- -------- -------- --------- ------------------ --------- --------
30 September 2020 6.07 13.84 8.14 7.07 6.72 1.04 - 42.88
---------- ---------- -------- -------- --------- ------------------ --------- --------
The undiscounted future minimum lease payments under
non--cancellable operating leases receivable by the Group are as
follows:
Between Between Between Between
Less than 1 and 2 and 3 and 4 and More than
1 year 2 years 3 years 4 years 5 years 5 years Total
EURm EURm EURm EURm EURm EURm EURm
-----------
30 September 2021 50.43 51.25 47.63 44.58 40.91 290.29 525.09
------------ ----------- ----------- ----------- ----------- ------------ ---------
30 September 2020 37.73 36.91 36.99 34.36 31.29 186.91 364.19
------------ ----------- ----------- ----------- ----------- ------------ ---------
The Group's investment properties are leased mainly to single
tenants, some of which have rental securities attached (bank or
parent guarantees, cash deposit), under the terms of a commercial
property lease. The majority have rent indexation that are linked
to either RPI/CPI or fixed uplifts.
There are two tenants representing more than 10% of rental
income during the year (EUR8.79 million and EUR6.20 million) (2020:
three tenants). As at 30 September 2021, four tenants represented
more than 10% of passing rent (2020: three tenants).
7. Direct property costs
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
---------------- ----------------
Service charge expense 7.41 6.51
---------------- ----------------
Other expenses 1.34 0.89
---------------- ----------------
Total property expenses 8.75 7.40
---------------- ----------------
8. Administrative and other expenses
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Investment management fees(1) 7.88 6.02
---------------- ----------------
Directors' remuneration (note 9) 0.24 0.23
---------------- ----------------
Auditor's fees:
---------------- ----------------
Fees payable for the audit of the Company's accounts 0.49 0.35
--------------------------------------------------------- ---------------- ----------------
Fees payable for the review of the Company's
interim accounts 0.07 0.04
--------------------------------------------------------- ---------------- ----------------
Fees payable for the audit of the Company's subsidiaries 0.12 0.10
--------------------------------------------------------- ---------------- ----------------
Total Auditor's fee 0.68 0.49
---------------- ----------------
Corporate administration fees 1.17 0.97
---------------- ----------------
Regulatory fees 0.09 0.09
---------------- ----------------
Legal and professional fees 1.27 2.29
---------------- ----------------
Marketing and promotional fees 0.59 0.49
---------------- ----------------
Other administrative costs 0.30 0.15
---------------- ----------------
Total administrative and other expenses 12.22 10.73
---------------- ----------------
(1) Investment management fees include fees payable to Tritax
Management LLP for EUR5.46 million (30 September 2020: EUR4.1
million (see note 26). The remaining EUR2.42 million (2020: EUR1.92
million) were paid to asset managers and property managers.
The effect of foreign exchange differences for the year ended 30
September 2021 consists of unrealised foreign exchange currency
loss of EUR0.74 million and offset by realised foreign exchange
currency gain of EUR0.04 million (2020: unrealised foreign exchange
currency loss of EUR0.03 million and offset by realised foreign
exchange currency gain of EUR0.05 million).
Fees relating to the share issuances have been treated as share
issue expenses and offset against share premium. The transaction
costs related to the loan and borrowings have been treated as part
of the arrangement fees for issuing the debt, of which EUR0.07
million relates to fee payable to the auditors as non-audit
services (2020: EURnil). The fees in relation to the acquisition of
assets have been capitalised into the cost of the respective
assets.
9. Directors' remuneration
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
---------------- ----------------
Directors' fees 0.22 0.20
---------------- ----------------
Employer's National Insurance 0.02 0.03
---------------- ----------------
Total Directors' remuneration 0.24 0.23
---------------- ----------------
A summary of the Directors' emoluments, including the
disclosures required by the Companies Act 2006, is set out in the
Directors' Remuneration Report.
Personnel
During the current and prior periods under review the Company
did not have any personnel, besides the Directors of the Company.
Furthermore, the Company does not have the intention to engage
other personnel in future.
10. Finance expense
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Interest payable on loans and bank borrowings 5.24 5.82
---------------- ----------------
Commitment fees payable on bank borrowings 1.56 1.84
---------------- ----------------
Fair value movement on remeasurement of put option
(note 19) 4.93 1.88
---------------- ----------------
Bank fees 0.32 0.11
---------------- ----------------
One-off cost of extinguishment of bank loans 0.02 -
---------------- ----------------
Amortisation of loan arrangement fees 2.47 0.92
---------------- ----------------
Total finance expense 14.54 10.57
---------------- ----------------
The total interest payable on financial liabilities carried at
amortised cost comprises interest and commitment fees payable on
bank borrowings of EUR6.81 million (30 September 2020: EUR7.66
million), of which EURnil was capitalised in both periods, and
amortisation of loan arrangement fees of EUR2.47 million (30
September 2020: EUR0.92 million) of which EUR8.92 million (30
September 2020: EUR0.74 million) of the loan agreement fees was
capitalised into the loan in the year (see note 18).
11. Taxation
a) Tax charge in the Group Statement of Comprehensive Income
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Current taxation:
---------------- ----------------
UK taxation - -
---------------- ----------------
Overseas taxation-current year(1) 3.58 0.68
---------------- ----------------
Overseas taxation-prior year adjustment 0.11 (0.27)
---------------- ----------------
Deferred taxation:
---------------- ----------------
UK taxation - -
---------------- ----------------
Overseas taxation 20.54 8.38
---------------- ----------------
Total tax charge 24.23 8.79
---------------- ----------------
(1) Includes the capital gains tax on disposal of investment
properties for EUR3.05 million.
The UK corporation tax charge of EURnil reflects the Company's
intention to declare sufficient "qualifying interest distributions"
to fully offset its "qualifying interest income" in the year in
accordance with its status as an Investment Trust Company
("ITC").
In the 3 March 2021 Budget it was announced that the UK tax rate
will increase to 25% from 1 April 2023. This will have a
consequential effect on the Group's future tax charge. This rate
change was substantially enacted at year end, there was no material
impact on the deferred tax based on this change.
b) Factors affecting the tax charge for the year
The tax assessed for the year is lower than the standard rate of
corporation tax in the UK. The differences are explained below:
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Profit before taxation 129.00 53.58
---------------- ----------------
Theoretical tax at UK corporation tax rate of
19% (30 September 2020: 19%) 24.50 10.18
---------------- ----------------
Losses where no deferred taxes have been recognised 1.92 0.56
---------------- ----------------
Impact of different tax rates on foreign jurisdictions 0.14 (0.22)
---------------------------------------------------------- ---------------- ----------------
Expenses not deductible for tax purposes (1.47) 0.09
---------------- ----------------
Impact of UK interest distributions from the
Investment Trust (0.97) (1.55)
---------------- ----------------
Prior year adjustment to current tax 0.11 (0.27)
---------------- ----------------
Total 24.23 8.79
---------------- ----------------
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Deferred tax assets:
---------------- ----------------
Differences between tax and property revaluation 0.01 0.09
---------------- ----------------
Tax losses carried forward 0.23 0.82
---------------- ----------------
Other - 0.24
---------------- ----------------
Total 0.24 1.15
---------------- ----------------
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Deferred tax liabilities:
---------------- ----------------
Differences between tax and property revaluation 33.30 13.57
---------------- ----------------
Other - 0.07
---------------- ----------------
Total 33.30 13.64
---------------- ----------------
The amount of unutilised tax losses and tax credits for which no
deferred tax asset is recognised in the profit and loss account was
EUR6.12 million.
12. Earnings per share
Earnings per share ("EPS") amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of the
Group by the weighted average number of Ordinary Shares in issue
during the year. As at 30 September 2021 and 2020, there are no
dilutive or potentially dilutive equity arrangements in
existence.
The calculation of EPS is based on the following:
Weighted
average
Net profit number
attributable of Ordinary
to Ordinary Shares Earnings
Shareholders (1) per share
For the year ended 30 September 2021 EURm '000 cent
Basic EPS 104.83 535,145 19.59
---------------- --------------- -------------
Adjustments to remove:
---------------- --------------- -------------
Deferred tax charge and capital gains
tax on disposal of investment properties
(note 11) 23.62
---------------- --------------- -------------
Changes in fair value of investment properties
(note 14) (106.46)
---------------- --------------- -------------
Changes in fair value of interest rate
derivatives (note 20) 0.05
---------------- --------------- -------------
Gain on disposal of investment property (7.33)
---------------- --------------- -------------
EPRA EPS 14.71 535,145 2.75
---------------- --------------- -------------
Adjustments to (exclude)/ include:
---------------- --------------- -------------
Rental income recognised in respect of
fixed uplifts (2.31)
---------------- --------------- -------------
Rental income deferred(3) 1.60
---------------- --------------- -------------
Amortisation of loan arrangement fees 2.47
---------------- --------------- -------------
Unrealised foreign exchange currency loss 0.68
---------------- --------------- -------------
Fair value movement on remeasurement of
put option (note 10) 4.32
---------------- --------------- -------------
Rental guarantee receipts excluded from
property income-settled via cash (2) 2.90
---------------- --------------- -------------
Rental guarantee receipts excluded from
property income-settled via contracted
liability settlement (2) 0.28
---------------- --------------- -------------
Adjusted EPS 24.65 535,145 4.61
---------------- --------------- -------------
Weighted
average
Net profit number
attributable of Ordinary
to Ordinary Shares Earnings
Shareholders (1) per share
For the year ended 30 September 2020 EURm '000 cent
Basic EPS 44.79 422,727 10.60
---------------- --------------- -------------
Adjustments to remove:
---------------- --------------- -------------
Deferred tax charge (note 11) 8.38
---------------- --------------- -------------
Changes in fair value of investment properties
(note 14) (38.57)
---------------- --------------- -------------
Changes in fair value of interest rate
derivatives (note 20) 0.03
---------------- --------------- -------------
Gain on disposal of investment property (0.83)
---------------- --------------- -------------
EPRA EPS 13.80 422,727 3.26
---------------- --------------- -------------
Adjustments to include/(exclude):
---------------- --------------- -------------
Licence fee receivable on forward funded
developments 0.50
---------------- --------------- -------------
Rental income recognised in respect of
fixed uplifts (1.92)
---------------- --------------- -------------
Rental income deferred(3) (1.60)
---------------- --------------- -------------
Amortisation of loan arrangement fees 0.92
---------------- --------------- -------------
Unrealised foreign exchange currency loss 0.02
---------------- --------------- -------------
Fair value movement on remeasurement of
put option (note 10) 1.88
---------------- --------------- -------------
Rental guarantee receipts excluded from
property income-settled via cash (2) 2.24
---------------- --------------- -------------
Rental guarantee receipts excluded from
property income-settled via contracted
liability settlement (2) 1.72
---------------- --------------- -------------
Adjusted EPS 17.56 422,727 4.16
---------------- --------------- -------------
1 Based on the weighted average number of Ordinary Shares in
issue throughout the period.
2 This is offset against the cost of investment properties.
3 Covid-19 rent deferral was received in full in 2021.
Adjusted Earnings is a performance measure used by the Board to
assess the level of the Group's dividend payments. The metric
mainly adjusts EPRA earnings for:
i. Exclusion of non-cash items credited or charged to the Group
Statement of Comprehensive Income, such as fixed rental uplift
adjustments and amortisation of loan arrangement fees;
ii. Inclusion of licence fees which relate to cash received from
developers during development periods, in order to access the land;
and
iii. Inclusion of rental guarantee adjustments which relate to
acquired assets with properties which have had an income guarantee
attached to them as part of the acquisition of the asset. The
rental guarantee is released (through a cash movement or contracted
liability settlement) as Adjusted Earnings over the period of the
lease which it is intended to cover or lease break - however, this
release does not go through rental income in the Group Statement of
Comprehensive Income, and as such an adjustment is made to
recognise the receipt.
13. Dividends paid
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Final dividend in respect of year ended 30 September
2020
at 1.10 cent per Ordinary Share (30 September
2019: 1.00 cent) 4.65 4.23
---------------- ----------------
First interim dividend in respect of year ended
30 September 2021
at 1.25 cent per Ordinary Share (30 September
2020: 1.10 cent) 5.28 4.65
---------------- ----------------
Second interim dividend in respect of year ended
30 September 2021
at 1.25 cent per Ordinary Share (30 September
2020: 1.10 cent) 7.68 4.65
---------------- ----------------
Third interim dividend in respect of year ended
30 September 2021
at 1.25 cent per Ordinary Share (30 September
2020: 1.10 cent) 7.69 4.65
---------------- ----------------
Total dividends paid 25.30 18.18
---------------- ----------------
Total dividends paid for the year 3.75 cent 3.30 cent
---------------- ----------------
Total dividends unpaid but declared for the year 1.25 cent 1.10 cent
---------------- ----------------
Total dividends declared for the year 5.00 cent 4.40 cent
---------------- ----------------
On 7 December 2021, the Directors of the Company declared a
fourth interim dividend in respect of the period from 1 July 2021
to 30 September 2021 of 1.25 cent per Ordinary Share, which will be
payable on or around 14 January 2022 to Shareholders on the
register on 17 December 2021.
Out of EUR30.75 million (30 September 2020: EUR18.60 million)
dividends declared for the year, EUR6.04 million (30 September
2020: EUR5.70 million) is designated as interest distribution.
14. Investment properties
The Group's investment property has been valued at fair value by
Jones Lang LaSalle Limited ("JLL"), an accredited independent
valuer with a recognised and relevant professional qualification
and with recent experience in the locations and categories of the
investment properties being valued. The valuations have been
prepared in accordance with the RICS Valuation - Global Standards
January 2020 ("the Red Book") and incorporate the recommendations
of the International Valuation Standards which are consistent with
the principles set out in IFRS 13. In forming its opinion, JLL
makes a series of assumptions, which are typically market related,
such as net initial yields and expected rental values and are based
on the Valuer's professional judgement and the current tenancy of
the properties.
The valuations are the ultimate responsibility of the Directors.
Accordingly, the critical assumptions used in establishing the
independent valuation are reviewed by the Board.
The total valuation fee incurred by the Group in the year
amounts to EUR75,400 (period ended 30 September 2020: EUR67,600).
The fee is not contingent on the valuation of the properties.
Other than Tritax EuroBox plc, the external valuer provides
valuation and research - related services to the Tritax Group, as
well as to other funds Tritax Group manages. The Directors ensure
full independence of the valuer.
All acquisitions during the current and prior period have been
treated as asset purchases rather than business combinations (see
note 3.1).
During the year, the following investment properties were
acquired:
Location Date acquired
Nivelles, Belgium (--) 29 January 2021
------------------
Geiselwind, Germany (--) 1 April 2021
------------------
Lich, Germany (--) 7 June 2021
------------------
Gothenburg, Sweden (--) 18 June 2021
--------------------------- ------------------
-- Acquired based on share deal.
Investment Investment Investment
properties properties properties
completed under construction Total
EURm EURm EURm
At 1 October 2020 837.90 - 837.90
-------------- ---------------------- --------------
Acquisition of properties(3) 372.56 - 372.56
-------------- ---------------------- --------------
Improvements to investment properties 1.10 - 1.10
-------------- ---------------------- --------------
Development expenditure - 19.81 19.81
-------------- ---------------------- --------------
Transfer from investment properties to
investment properties under construction (8.10) 8.10 -
-------------- ---------------------- --------------
Transfer from investment properties under
construction to investment properties 10.19 (10.19) -
-------------- ---------------------- --------------
Licence fees and rental guarantees received (2.49) - (2.49)
-------------- ---------------------- --------------
Fixed rental uplift and tenant lease incentives
(1) 3.82 - 3.82
-------------- ---------------------- --------------
Amortisation of rental uplift and tenant
lease incentives (1) (0.81) - (0.81)
-------------- ---------------------- --------------
Disposal of properties (56.97) - (56.97)
-------------- ---------------------- --------------
Change in fair value during the year (2) 100.15 6.31 106.46
-------------- ---------------------- --------------
As at 30 September 2021 1,257.35 24.03 1,281.38
-------------- ---------------------- --------------
Investment Investment Investment
properties properties properties
completed under construction Total
EURm EURm EURm
At 1 October 2019 665.75 21.83 687.58
-------------- ---------------------- --------------
Acquisition of properties 105.86 - 105.86
-------------- ---------------------- --------------
Improvements to investment properties 1.43 - 1.43
-------------- ---------------------- --------------
Development expenditure - 6.22 6.22
-------------- ---------------------- --------------
Transfer from investment properties under
construction to completed 28.05 (28.05) -
-------------- ---------------------- --------------
Licence fees and rental guarantees received (3.90) - (3.90)
-------------- ---------------------- --------------
Fixed rental uplift and tenant lease incentives
(1) 2.57 - 2.57
-------------- ---------------------- --------------
Amortisation of rental uplift and tenant
lease incentives (1) (0.43) - (0.43)
-------------- ---------------------- --------------
Change in fair value during the year (2) 38.57 - 38.57
-------------- ---------------------- --------------
As at 30 September 2020 837.90 - 837.90
-------------- ---------------------- --------------
1 This balance arises as a result of the IFRS treatment of
leases with fixed or minimum rental uplifts and rent--free periods,
which requires the recognition of rental income on a straight--line
basis over the lease term. The amount as at 30 September 2021 was
EUR7.67 million (30 September 2020: EUR6.23 million). The
difference between this and cash receipts changes the carrying
value of the property against which revaluations are measured (also
see note 6).
2 Included in the fair value change in the year were unrealised
gains of EUR107.34 million (30 September 2020 : EUR53.93 million)
and unrealised losses of EUR0.88 million (30 September 2020 :
EUR15.36 million).
3 This Includes acquisition costs of EUR3.69 million (30
September 2020 : EUR2.27 million).
30 September 30 September
2021 2020
EURm EURm
Investment properties in Balance Sheet 1,281.38 837.90
--------------- ---------------
Rental guarantee held in separate receivable 1.20 1.41
--------------- ---------------
Total external valuation of investment properties 1,282.58 839.31
--------------- ---------------
As at 30 September 2021, the Group had the following outstanding
capital commitments in relation to its forward funded pre--let
development assets (30 September 2020: EUR44.0 million):
-- Mango extension of EUR18.9 million; and
-- Strykow of EUR13.5 million subject to pre-let conditions being met.
These costs are not provided for in the Statement of Financial
Position. Capital commitments represent costs to bring the asset to
completion under the developer's funding agreements which include
the developer's margin.
Valuation risk
There is risk to the fair value of real estate assets that are
part of the portfolio of the Group, comprising variation in the
yields that the market attributes to the real estate investments
and the market income that may be earned.
Real estate investments can be impacted adversely by external
factors such as the general economic climate, supply and demand
dynamics in the market, competition and increase in operating
costs.
Besides asset specific characteristics, general market
circumstances affect the value and income from investment
properties such as the cost of regulatory requirements related to
investment properties, interest rate levels and the availability of
financing.
The Manager of the Group has implemented a portfolio strategy
with the aim to mitigate the above stated real estate risk. By
diversifying in regions, risk categories and tenants, it is
expected to lower the risk profile of the portfolio.
As of the date of this Annual Report, the only investments of
the Group that have been identified consist of the current
portfolio as specified in the Management Report. While the Group is
negotiating to acquire further properties, there is no guarantee
that these properties will form part of the portfolio of the
Group.
With respect to new investments, management will be targeting
specific investment categories based on the Group's investment
objective and restrictions. Because such investments may be made
over a substantial period of time, the Group faces the risk of
interest rate fluctuations in case of leveraging these investments
and adverse changes in the real estate markets.
Fair value hierarchy
The Group considers that all of its investment properties and
investment properties under construction fall within Level 3 of the
fair value hierarchy as defined by IFRS 13. There have been no
transfers between Level 1 and Level 2 during any of the periods,
nor have there been any transfers between Level 2 and Level 3
during any of the periods.
The valuations have been prepared on the basis of Market Value
("MV"), which is defined in the RICS Valuation Standards, as:
"The estimated amount for which a property should exchange on
the date of valuation between a willing buyer and a willing seller
in an arm's--length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without
compulsion."
MV as defined in the RICS Valuation Standards is the equivalent
of fair value under IFRS.
The descriptions and definitions relating to valuation
techniques and key unobservable inputs made in determining fair
values are as follows:
Valuation techniques
Investment properties completed: income approach
The income method (or income approach) quantifies the net
present value of future benefits associated with the ownership of
the asset by totalling the current tenancy of the property,
followed by the demand market rent on lease expiry, capitalised at
an appropriate yield.
Investment properties under construction: residual approach or
equivalent
The residual approach or equivalent for properties under
construction takes the expected valuation of the finished property
using the income approach and deducts forecast costs to complete
the development and an allowance for developer's profit.
Unobservable input: estimated rental value ("ERV")
ERV is dependent upon a number of variables in relation to the
Group's property. These include: size, building specification and
location. At 30 September 2021, the range was between EUR40.73 --
EUR88.01 per square metre, per annum.
Unobservable input: yield
Yield is dependent on the tenant, lease length and the other
variables listed above for ERV. At 30 September 2021, the average
yield was 3.88% and the range was between 3.33% - 7.00%.
Yield and ERV are not necessarily independent variables. It is
possible a change in one assumption may result in an offsetting
change to the other but equally the change in both assumptions may
increase the impact on valuation.
Sensitivities of measurement of significant unobservable
inputs
As set out within significant accounting estimates and
judgements above, the Group's property portfolio valuation is open
to estimation uncertainty and is inherently subjective by
nature.
As a result the following sensitivity analysis has been prepared
for investment properties:
-0.25% +0.25% -5% in +5% in
yield yield ERV ERV
EURm EURm EURm EURm
Increase/(decrease) in the fair
value of investment properties
as at 30 September 2021 82.16 (72.68) (27.57) 26.28
----------------------------------- --------- ---------- ---------- ---------
Increase/(decrease) in the fair
value of investment properties
as at 30 September 2020 48.56 (43.41) (20.03) 20.03
----------------------------------- --------- ---------- ---------- ---------
The JLL valuation includes deductions for transaction costs that
would be incurred by a hypothetical purchaser at the valuation
date. These costs include Real Estate Transfer Tax ("RETT")
equivalent to stamp duty except for properties in Italy and
Belgium. In the former, this is due to Italy being an Investment
Management Company ("SGR") and in the latter, the local valuation
practice is to exclude such costs given the prevalence of corporate
rather than asset transactions in these markets.
15. Trade and other receivables
30 September 30 September
2021 2020
Non-current trade and other receivables EURm EURm
Cash in public institutions 1.17 1.17
--------------- ---------------
The cash in public institutions is a deposit of EUR1.17 million
given by the tenant for the property in Barcelona, Spain.
30 September 30 September
2021 2020
Current trade and other receivables EURm EURm
Trade receivables 1.45 2.52
--------------- ---------------
Prepayments, accrued income and other receivables 12.28 5.92
--------------- ---------------
Escrow cash - 0.39
--------------- ---------------
VAT receivable* 3.51 5.89
--------------- ---------------
17.24 14.72
--------------- ---------------
* VAT receivable relates mainly due to VAT reclaim on the
purchase of the property in Italy EUR2 million (30 September 2020:
EUR4 million).
The following table sets out the ageing of trade receivables as
at 30 September 2021:
30 September 30 September
2021 2020
Past due but not impaired EURm EURm
<30 days 1.16 1.69
--------------- ---------------
30-60 days - 0.18
--------------- ---------------
60-90 days - -
--------------- ---------------
90 days+ 0.29 0.65
--------------- ---------------
Total 1.45 2.52
--------------- ---------------
Past due and impaired - -
--------------- ---------------
Total 1.45 2.52
--------------- ---------------
The carrying value of trade and other receivables classified at
amortised cost approximates fair value.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses
on a collective basis, trade receivables are grouped based on
similar credit risk and ageing.
The expected loss rates are based on the Group's historical
credit losses experienced over the period prior to the period end.
The historical loss rates are then adjusted for current and
forward-looking information on macroeconomic factors affecting the
Group's customers. Both the expected credit loss provision and the
incurred loss provision in the current and prior period are
immaterial.
No reasonably possible changes in the assumptions underpinning
the expected credit loss provision would give rise to a material
expected credit loss.
16. Cash and cash equivalents
30 September 30 September
2021 2020
EURm EURm
Cash and cash equivalents 329.73 24.44
--------------- ---------------
All cash held under the Italian subsidiaries fund are subject to
local dividend distribution rules which means that dividends can
only be paid twice a year. The amount of cash held in Italy as at
30 September 2021 was EUR3.33 million (30 September 2020: EUR2.92
million).
17. Trade and other payables
30 September 30 September
2021 2020
Non-current trade and other payables EURm EURm
Other payables 1.40 1.46
--------------- ---------------
30 September 30 September
2021 2020
Current trade and other payables EURm EURm
Trade and other payables 3.31 3.57
--------------- ---------------
Bank loan interest payable 1.78 0.40
--------------- ---------------
Deferred income 1.73 0.54
--------------- ---------------
Accruals 14.39 4.44
--------------- ---------------
VAT liability 0.71 0.34
--------------- ---------------
21.92 9.29
--------------- ---------------
The carrying value of trade and other payables classified as
financial liabilities measured at amortised cost approximates fair
value.
18. Loans notes and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost. For more information about the Group's
exposure to interest rate and foreign currency risk, see note
21.
30 September 30 September
2021 2020
EURm EURm
Bank borrowings - 340.63
--------------- ---------------
Loan notes 492.17 -
--------------- ---------------
Non-current liabilities: loans and borrowings 492.17 340.63
--------------- ---------------
The Group has a long-term Revolving Credit Facility ("RCF") (see
table below). On 25 June 2021, the RCF was reduced from EUR425
million to EUR250 million. The loan has a margin of 1.2% to 1.9%
above the higher of zero or Euribor, depending on the drawn level
and the prevailing LTV ratio. On 15 July 2021, BNP Paribas, Bank of
China, Bank of America and Banco de Sabadell have extended their
RCF from October 2024 to October 2025.
Facility Maturity
EURm date
19 October
HSBC UK Bank 58.8 2023
----------- -------------
19 October
BNP Paribas 58.8 2025
----------- -------------
19 October
Bank of China 58.8 2025
----------- -------------
19 October
Bank of America 58.9 2025
----------- -------------
19 October
Banco de Sabadell 14.7 2025
----------- -------------
Total RCF 250.0
----------- -------------
On 2 June 2021, the Company priced the EUR500 million of senior
unsecured green bonds maturing on 2 June 2026. The notes have an
interest of 0.95%. An amount equivalent to the net proceeds of each
Green Finance Transaction ("GFT") will be used to acquire, finance
or refinance, in whole or in part, new or existing Eligible Green
Projects ("EGPs") that meet the Eligibility Criteria. The Group
will publish an Annual Green Finance Report that will detail the
allocation of net proceeds of Green Finance Transactions and
associated impact metrics until the full allocation of net
proceeds.
As at 30 September 2021, 67% (2020: nil) of the Group's debt
facility commitments are fixed term with 33% floating term (2020:
100%). The weighted average term to maturity of the Group's debt as
at the year-end is 4.4 years (30 September 2020: 3.8 years). The
LTV across all drawn debt was 13% against a target of 45%.
The Group has been in compliance with all of the financial
covenants of the Group's loans and borrowings facilities as
applicable throughout the year covered by the financial
statements.
Any associated fees in arranging the loan and borrowings that
are unamortised as at the year end are offset against amounts drawn
on the facilities as shown in the table below:
30 September 30 September
2021 2020
Bank borrowings drawn EURm EURm
Bank borrowings at the beginning of the year 340.63 231.95
--------------- ---------------
Bank borrowings drawn in the year 180.00 121.00
--------------- ---------------
Bank borrowings repaid in the year (524.00) (12.50)
--------------- ---------------
Loan issue costs paid (0.63) (0.74)
--------------- ---------------
Non-cash amortisation of loan issue costs 2.01 0.92
--------------- ---------------
Reclass unamortised loan issue costs to prepayments 1.99 -
--------------- ---------------
Non-current liabilities: borrowings - 340.63
--------------- ---------------
30 September 30 September
2021 2020
Loan notes EURm EURm
0.95% Green Bonds 2026 500.00 -
--------------- ---------------
Less: unamortised costs on loan notes (8.29) -
--------------- ---------------
Non-cash amortisation of loan issue costs 0.46
--------------- ---------------
Non-current liabilities: loan notes 492.17 -
--------------- ---------------
A summary of the drawn and undrawn loans and bank borrowings in
the year is shown below:
30 September 2021
Total debt
Drawn Undrawn available
EURm EURm EURm
--------- ---------- -------------
Repayable between one and two years - - -
--------- ---------- -------------
Repayable between two and three years - 58.82 58.82
--------- ---------- -------------
Repayable between three and four years - - -
--------- ---------- -------------
Repayable between four and five years 500.00 191.18 691.18
--------- ---------- -------------
Repayable in over five years - - -
--------- ---------- -------------
500.00 250.00 250.00
--------- ---------- -------------
30 September 2020
Total debt
Drawn Undrawn available
EURm EURm EURm
--------- ---------- -------------
Repayable between one and two years - - -
--------- ---------- -------------
Repayable between two and three years - - -
--------- ---------- -------------
Repayable between three and four years 80.94 19.06 100.00
--------- ---------- -------------
Repayable between four and five years 263.06 61.94 325.00
--------- ---------- -------------
Repayable in over five years - - -
--------- ---------- -------------
344.00 81.00 425.00
--------- ---------- -------------
Set out below is a comparison by class of the carrying amounts
and the fair value of the Group's financial instruments that are
carried in the financial statements:
Book value Fair value Book value Fair value
30 September 30 September 30 September 30 September
2021 2021 2020 2020
EURm EURm EURm EURm
----------------
Bank borrowings: RCF - - 344.00 344.00
--------------------------------- ---------------- ---------------- ---------------- ----------------
Loan notes: 0.95% Green Bonds
2026 500.00 506.60 - -
--------------------------------- ---------------- ---------------- ---------------- ----------------
Loan notes and borrowings 500.00 506.60 344.00 344.00
--------------------------------- ---------------- ---------------- ---------------- ----------------
The book value of the bank borrowings that are carried in the
financial statements approximates their fair value at the end of
the year because it is based on variable rate. The fair value of
financial liabilities traded on active liquid markets are the 0.95%
Green Bonds 2026. They are determined with reference to the quoted
market prices. The financial liabilities are considered to be a
Level 1 fair value measure. The fair value of the financial
liabilities at Level 1 was EUR506.6 million (30 September 2020:
EURnil).
19. Other liabilities
30 September 30 September
2021 2020
EURm EURm
Balance at the beginning of the year 8.89 7.28
--------------- ---------------
Addition 11.98 0.02
--------------- ---------------
Repayments (0.61) (0.29)
--------------- ---------------
Fair value movements on measurement of put option 4.93 1.88
--------------- ---------------
Balance at the end of the year 25.19 8.89
--------------- ---------------
The Group's properties in Germany are held in subsidiaries in
which the Group holds 94.9% or 89.9% of the shares in those
subsidiaries. As part of the purchase agreements, the Group issued
put options to the minority shareholders. The options are
exercisable 10 years after acquisition and would require the Group
to acquire all shares held by the minority shareholder at the then
market value. Prior to the option date the Group has guaranteed a
fixed dividend to the minority shareholder. If this is not met by
the subsidiary, then the Company is required to settle this
obligation.
The options are exercisable as follows:
Ownership Date of maturity
Companies % of option
Tritax EuroBox (Bochum) Propco GmbH 94.9 5 April 2029
------------ -------------------
Tritax EuroBox (Peine) Propco GmbH 94.9 28 March 2029
------------ -------------------
Dietz Logistik 33. Grundbesitz GmbH 89.9 12 November
2029
------------ -------------------
Tritax Eurobox (Bremen I) Propco GmbH 89.9 22 February
2030
------------ -------------------
Tritax Eurobox (Bremen II) Propco GmbH 89.9 22 February
2030
------------ -------------------
Dietz Logistik 26. Grundbesitz GmbH 89.9 31 March 2031
------------ -------------------
Dietz Logistik 44. Grundbesitz GmbH 89.9 6 June 2031
------------ -------------------
20. Derivative financial instruments
To mitigate the interest rate risk that arises as a result of
entering into variable rate loans, a number of interest rate caps
have been taken out in respect of the Group's variable rate debt to
cap the rate to which three-month Euribor can rise. Each cap runs
coterminous to the initial term of the respective loans. The caps
expire in October 2023.
As at the current and prior period ends, the Group had notional
value of interest rate caps of EUR300 million to act as a hedge
against the EUR250 million Revolving Credit Facility (see note
18).
The weighted average capped rate, excluding any margin payable,
for the Group as at the year-end was 0.67% (30 September 2020:
0.67%). There was no premium payable towards securing the interest
rate caps both in the year and at 30 September 2020.
30 September 30 September
2021 2020
EURm EURm
--------------- ---------------
Interest rate derivatives valuation brought forward 0.09 0.12
--------------- ---------------
Fair value movement (0.04) (0.03)
--------------- ---------------
Non-current assets: interest rate derivatives
carried forward 0.05 0.09
--------------- ---------------
The interest rate derivatives are marked to market based on the
valuation by the relevant counterparty banks on a quarterly basis
in accordance with IFRS 9. Any movement in the mark to market
values of the derivatives are taken to the Group profit or
loss.
As at the year--end date the total proportion of debt hedged via
interest rate derivatives equated to 0% (30 September 2020:
87%).
Fair value hierarchy
The fair value of the Group's interest rate derivatives is
recorded in the Group Statement of Financial Position and is
determined by forming an expectation that interest rates will
exceed strike rates and discounting these future cash flows at the
prevailing market rates as at the year end. This valuation
technique falls within Level 2 of the fair value hierarchy, as
defined by IFRS 13. The valuation was provided by the counterparty
to the derivatives. There have been no transfers between Level 1
and Level 2 during any of the periods, nor have there been any
transfers between Level 2 and Level 3 during any of the
periods.
21. Financial risk management
Financial instruments
The Group's principal financial assets and liabilities are those
that arise directly from its operations: trade and other
receivables, trade and other payables and cash held at bank. The
Group's other principal financial assets and liabilities are bank
borrowings and interest rate derivatives, the main purpose of which
is to finance the acquisition and development of the Group's
investment property portfolio and hedge against the risk of
interest rates rising. The book value of the Group's financial
instruments that are carried in the financial statements
approximates their fair value at the end of the year.
Risk management
The Group is exposed to market risk (including interest rate
risk), credit risk and liquidity risk. The Board of Directors
oversees the management of these risks. The Board of Directors
reviews and agrees policies for managing each of these risks, which
are summarised below.
Market risk
Market risk is the risk that the fair values of financial
instruments will fluctuate because of changes in market prices. The
financial instruments held by the Group that are affected by market
risk are principally the Group's cash balances and bank borrowings
along with interest rate derivatives entered into to mitigate
interest rate risk.
The Group monitors its interest rate exposure on a regular
basis. A sensitivity analysis was performed to ascertain the impact
on the Group Cash Flow Statement and net assets based on nominal
borrowings at the year-end. Given that no RCF was drawn at the
year-end, a 50 basis point decrease/increase in interest rates
would have no impact on net assets.
The Group currently operates in eight countries. The current
distribution of total assets is as follows:
Total The
assets Belgium Germany Spain Italy Poland UK Netherlands Sweden Total
---------
30
September
2021 142.09 681.46 200.52 147.43 61.22 295.92 62.25 48.78 1,629.81
---------- ---------- --------- --------- --------- --------- -------------- --------- -----------
30
September
2020 93.01 303.63 169.12 141.52 117.39 4.37 50.43 - 879.47
---------- ---------- --------- --------- --------- --------- -------------- --------- -----------
Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risks
from both its leasing activities and financing activities,
including deposits with banks and financial institutions. Credit
risk is mitigated by tenants being required to pay rentals in
advance under their lease obligations. The credit quality of the
tenant is assessed based on an extensive credit rating scorecard at
the time of entering into a lease agreement or acquiring a let
property. The Group holds collateral by way of bank deposits
totalling EUR1.17 million (see note 15), and in certain cases holds
bank guarantee letters.
Outstanding trade receivables are regularly monitored. The
maximum exposure to credit risk at the reporting date is the
carrying value of each class of financial asset less the collateral
held.
Credit risk related to cash deposits
One of the credit risks of the Group arises with the banks and
financial institutions. The Board of Directors believes that the
credit risk on short--term deposits and current account cash
balances is limited because the counterparties are banks, which are
committed lenders to the Group, with high credit ratings assigned
by international credit--rating agencies.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and, going forward, the finance charges, principal
repayments on its borrowings and its commitments under forward
funded development arrangements (see note 14). It is the risk that
the Group will encounter difficulty in meeting its financial
obligations as they fall due, as the majority of the Group's assets
are property investments and are therefore not readily realisable.
The Group's objective is to ensure it has sufficient available
funds for its operations and to fund its capital expenditure. This
is achieved by continuous monitoring of forecast and actual cash
flows by management ensuring it has appropriate levels of cash and
available drawings to meet liabilities as they fall due.
The table below summarises the maturity profile of the Group's
financial liabilities, on the amount drawn at the year end, based
on contractual undiscounted payments, including interest
charges:
Carrying Total Less than Between Between More than
amount cash flows 3 months 3-12 months 1-2 years 2-5 years 5 years
EURm EURm EURm EURm EURm EURm EURm
30 September
2021
----------- -------------- ------------ -------------- ------------- ------------- ------------
Loans and
borrowings 492.17 527.46 1.45 4.35 5.80 515.86 -
----------- -------------- ------------ -------------- ------------- ------------- ------------
Trade and
other
payables * 20.88 20.88 19.48 - 1.40 - -
----------- -------------- ------------ -------------- ------------- ------------- ------------
Non-current
liabilities 25.19 25.19 - - - - 25.19
----------- -------------- ------------ -------------- ------------- ------------- ------------
Tenant
deposit 2.11 2.11 - - - - 2.11
----------- -------------- ------------ -------------- ------------- ------------- ------------
540.35 575.64 20.93 4.35 7.20 515.86 27.30
----------- -------------- ------------ -------------- ------------- ------------- ------------
Carrying Total Less than Between Between More than
amount cash flows 3 months 3-12 months 1-2 years 2-5 years 5 years
EURm EURm EURm EURm EURm EURm EURm
30 September
2020
----------- -------------- ------------ -------------- ------------- ------------- ------------
Loans and
borrowings 340.63 374.69 1.70 5.11 6.81 361.07 -
----------- -------------- ------------ -------------- ------------- ------------- ------------
Trade and
other
payables * 9.87 9.87 8.41 - 1.46 - -
----------- -------------- ------------ -------------- ------------- ------------- ------------
Non-current
liabilities 8.89 8.89 - - - - 8.89
----------- -------------- ------------ -------------- ------------- ------------- ------------
Tenant
deposit 1.31 1.31 - - - - 1.31
----------- -------------- ------------ -------------- ------------- ------------- ------------
360.70 394.76 10.11 5.11 8.27 361.07 10.20
----------- -------------- ------------ -------------- ------------- ------------- ------------
* Excludes VAT and deferred income as these are not financial
liabilities.
Foreign currency risk
The Group is Euro denominated. The Group operates
internationally, mainly in the Eurozone. The Group keeps some cash
in foreign currency to finance its working capital.
As at 30 September 2021 the Group has a cash balance of GBP
57.49 million and PLN 5.86 million, equivalent to EUR66.90 million
and EUR1.27 million respectively (30 September 2020: GBP 0.41
million and PLN 5.54 million, equivalent to EUR0.45 million and
EUR1.22 million respectively). The Group also has a cash balance of
SEK 11.94 million, equivalent to EUR1.18 million as at 30 September
2021 (30 September 2020: nil).
Development risk
Development risk is the exposure that the Group takes in
projects where building is not yet completed. Construction risk is
mitigated by the Group by entering into fixed price contracts with
the developers. Letting risk is usually alleviated by entering into
pre-let agreements with tenants or rental guarantees with the
developers or vendors.
Taxation risk
Tax laws in these countries may change in the future,
representing an increase in tax risk to the Company.
22. Capital management
The primary objective of the Group's capital management is to
ensure that it remains a going concern.
The Board, with the assistance of the Investment Manager,
monitors and reviews the Group's capital so as to promote the
long--term success of the business, facilitate expansion and
maintain sustainable returns for Shareholders. The Group considers
proceeds from share issuances, bank borrowings and retained
earnings as capital. The Group's policy on borrowings is as set out
below:
The level of borrowing will be on a prudent basis for the asset
class, and will seek to achieve a low cost of funds.
The Directors intend that the Group will maintain a conservative
level of aggregate borrowings with a medium--term target of 45% of
the Group's gross assets (with a limit of 50%).
The Group has complied with all covenants on its borrowings up
to the date of this report. The targets mentioned above sit
comfortably within the Group's covenant levels, which include LTV
and interest cover ratio. The Group LTV at the year end was 13% (30
September 2020: 39.9%).
23. Tenant deposit
30 September 30 September
2021 2020
Non-current liabilities EURm EURm
Balance at the beginning of the year 1.31 1.17
--------------- ---------------
Additions in the year 0.80 0.14
--------------- ---------------
Balance at the end of the year 2.11 1.31
--------------- ---------------
The main balance relates to a cash deposit given by the tenant
for the property in Barcelona, Spain.
24. Share capital
The share capital relates to amounts subscribed for share
capital at its nominal value:
30 September 30 September 30 September 30 September
2021 2021 2020 2020
Number EURm Number EURm
Issued and fully paid at 1 cent
each
--------------- --------------- --------------- ---------------
Balance at beginning of year -
EUR0.01 Ordinary Shares 422,727,273 4.23 422,727,273 4.23
--------------- --------------- --------------- ---------------
Shares issued in the year 383,966,105 3.84 - -
--------------- --------------- --------------- ---------------
Balance at end of year 806,693,378 8.07 422,727,273 4.23
--------------- --------------- --------------- ---------------
The Group has one class of Ordinary Shares which carry no right
to fixed income.
On 3 December 2020, the Manager has acquired in the market
94,777 Ordinary Shares at 103.82 pence per share on behalf of
certain members of staff of the Manager. On 1 June 2021, the Group
has also increased its share capital by 104,062 Ordinary Shares at
105.00 pence per share on behalf of certain members of staff of the
Manager.
On 10 March 2021 and 22 September 2021, the Group increased its
share capital by 192,633,688 Ordinary Shares for GBP1.03 each and
191,228,355 Ordinary Shares for GBP1.15 each respectively. As a
result, the Group's issued share capital increased to 806,693,378
Ordinary Shares with voting rights.
25. Net asset value ("NAV") per share
Basic NAV per share is calculated by dividing net assets in the
Group Statement of Financial Position attributable to ordinary
equity holders of the Parent by the number of Ordinary Shares
outstanding at the end of the year. As there are no dilutive
instruments outstanding, basic NAV per share is shown below:
30 September 30 September
2021 2020
EURm EURm
Net assets per Group Statement of Financial
Position 1,053.50 503.91
--------------- ---------------
Ordinary Shares:
--------------- ---------------
Issued share capital (number) 806,693,378 422,727,273
--------------- ---------------
NAV per share (expressed in Euro per share)
--------------- ---------------
Basic NAV per share 1.31 1.19
--------------- ---------------
The Group elected to early adopt the three new measures of net
asset value: EPRA Net Reinvestment Value ("NRV"), EPRA Net Tangible
Assets ("NTA") and EPRA Net Disposal Value ("NDV") for the year
ended 30 September 2020. Following a consultation of the various
stakeholders of the business, and in order to align the reporting
of the Group to its peers, the Group has decided to adopt the EPRA
NTA and EPRA NTA per share metrics as its primary EPRA NAV metric
measure, alongside Basic IFRS NAV, for the year ended 30 September
2021 onwards. Please refer to the Notes to the EPRA and Other Key
Performance Indicators section for details of all EPRA NAV
metrics."
30 September 2021 30 September 2020
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
EURm EURm EURm EURm EURm EURm
----------- ----------- ----------- ----------- ----------- -----------
NAV attributable
to Shareholders 1,053.50 1,053.50 1,053.50 503.91 503.91 503.91
----------- ----------- ----------- ----------- ----------- -----------
Mark-to-market adjustments
of derivatives (0.05) (0.05) - (0.09) (0.09) -
----------- ----------- ----------- ----------- ----------- -----------
Deferred tax adjustment 33.06 33.06 - 12.49 12.49 -
----------- ----------- ----------- ----------- ----------- -----------
Transaction costs(1) 60.84 - - 34.19 - -
----------- ----------- ----------- ----------- ----------- -----------
NAV 1,147.35 1,086.51 1,053.50 550.50 516.31 503.91
----------- ----------- ----------- ----------- ----------- -----------
NAV per share in
Euro 1.42 1.35 1.31 1.30 1.22 1.19
----------- ----------- ----------- ----------- ----------- -----------
(1) EPRA NTA and EPRA NDV reflect IFRS values which are net of
transaction costs (RETT and purchaser's costs). Transaction costs
are added back when calculating EPRA NRV .
26. Transactions with related parties
For the year ended 30 September 2021, all Directors and some of
the Partners of the Manager are considered key management
personnel. The terms and conditions of the Investment Management
Agreement are described in the Management Engagement Committee
Report. The fee payable to the Manager for the year ended 30
September 2021 was EUR5.46 million (2020: EUR4.13 million).
The total amount outstanding at the year end relating to the
Investment Management Agreement was EUR1.51 million (2020: EUR1.10
million).
Details of amounts paid to Directors for their services can be
found within the Directors' Remuneration Report.
On 1 October 2020, there were three new Members of the Manager,
namely Nick Preston, Frankie Whitehead and James Watson. On 1
February 2021, Alasdair Evans and Phil Redding were also appointed
as new Members of the Manager. They are also Members of SG
Commercial. Only Nick Preston and Phil Redding are considered as
key management personnel. The other Members of the Manager who are
considered as key management personnel are Colin Godfrey, James
Dunlop, Henry Franklin, Petrina Austin and Bjorn Hobart, who are
also Members of SG Commercial LLP.
During the year, the Directors received the following dividends:
Robert Orr: EUR1,220 (2020: EUR860), Keith Mansfield: EUR14,065
(2020: EUR12,470), Taco De Groot: EUR1,638 (2020: EUR 1,075) and
Eva-Lotta Sjostedt: EUR308 (2020: EUR127).
During the year, the Members of the Manager received the
following dividends: Colin Godfrey: EUR9,136 (2020: EUR6,142),
James Dunlop: EUR9,136 (2020: EUR6,142), Henry Franklin: EUR6,184
(2020: EUR4,137), Petrina Austin: EUR1,462 (2020: EUR981), Nick
Preston: EUR4,908 (2020: EUR3,156) and Phil Redding: EUR38 (2020:
EURnil).
On 3 December 2020 and 1 June 2021, the Manager acquired in the
market 94,777 Ordinary Shares at 103.82 pence per share and 104,062
Ordinary Shares at 105.00 pence per share respectively on behalf of
certain members of staff of the Manager.
27. Leases
As lessor
Details of the Group's leases from tenants of its investment
property are found in note 6.
As lessee
The Group holds one investment property, with a carrying amount
of EUR141.50 million, on a lease which ends in 86.5 years. A
peppercorn rent is paid and hence the associated lease liability
and right-of-use asset are immaterial.
28. Subsequent events
On 22 October 2021, the Group announced the future acquisition
of Gelsenkirchen for an agreed property price of EUR32 million,
subject to shareholders approval.
On 15 November 2021, the Group announced the future acquisition
of Bonen for an agreed property price of EUR117.9 million, subject
to shareholders approval.
On 30 November 2021, the Group acquired Piacenza asset in Italy
for the an agreed property price of EUR50.0 million and on 25
November 2021, the Group completed the acquisition of Settimo for
EUR24.4 million.
On 30 November 2021, the Group completed the acquisition of an
asset in Rosersberg for EUR27.9 million.
On 1 December 2021 the Group had secured EUR200 million private
placement debt which is split into 3 tranches as below:
EUR100 million with 7 year maturity and a coupon of 1.216%,
EUR50 million with 10 year maturity and a coupon of 1.449%, and
EUR50 million with twelve years maturity and a coupon of 1.59%.
There were no other significant events occurring after the
reporting period, but before the financial statements were
authorised for issue.
Company Balance Sheet
Company Registration Number 11367705
Note At 30 September 2021 At 30 September 2020
EURm EURm
------------------------------------- ------- ------------------------------------- -----------------------
Non-current assets
Derivative financial instruments 0.05 0.09
Trade and other receivables 5 634.93 466.52
Investment in subsidiaries 4 458.21 316.32
------------------------------------- ------- ------------------------------------- -----------------------
Total non-current assets 1,093.19 782.93
Current assets
Trade and other receivables 5 13.55 4.38
Cash held at bank 6 291.56 3.52
------------------------------------- ------- ------------------------------------- -----------------------
Total current assets 305.11 7.90
------------------------------------- ------- ------------------------------------- -----------------------
Total assets 1,398.30 790.83
------------------------------------- ------- ------------------------------------- -----------------------
Current liabilities
Trade and other payables 7 (6.18) (2.22)
Income tax liability - -
------------------------------------- ------- ------------------------------------- -----------------------
Total current liabilities (6.18) (2.22)
------------------------------------- ------- ------------------------------------- -----------------------
Non-current liabilities
Loans and borrowings 8 (492.17) (340.63)
------------------------------------- ------- ------------------------------------- -----------------------
Total non-current liabilities (492.17) (340.63)
------------------------------------- ------- ------------------------------------- -----------------------
Total liabilities (498.35) (342.85)
------------------------------------- ------- ------------------------------------- -----------------------
Total net assets 899.95 447.98
------------------------------------- ------- ------------------------------------- -----------------------
Equity
Share capital 9 8.07 4.23
Share premium reserve 597.46 131.24
Retained earnings 294.42 312.51
------------------------------------- ------- ------------------------------------- -----------------------
Total equity 899.95 447.98
------------------------------------- ------- ------------------------------------- -----------------------
The Company has taken advantage of the exemption allowed under
section 408 of the Companies Act 2006 and has not presented its own
profit and loss account in the financial statements. The profit
attributable to the Parent Company for the year ended 30 September
2021 amounted to EUR7.21 million (2020: EUR10.68 million).
The financial statements were approved by the Board of Directors
on 6 December 2021 and signed on its behalf by:
Robert Orr
Director
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2021
Share premium Retained earnings
Share capital Total
---------------------------------
Note EURm EURm EURm EURm
--------------------------------- ------- ---------------------- ---------------- -------------------- ----------
At 1 October 2020 4.23 131.24 312.51 447.98
Net profit for the year - - 7.21 7.21
--------------------------------- ------- ---------------------- ---------------- -------------------- ----------
Total comprehensive income - - 7.21 7.21
Contributions and
distributions:
New Share capital subscribed 3.84 476.14 - 479.98
Associated share issue costs - (9.92) - (9.92)
Dividends paid 3 - - (25.30) (25.30)
--------------------------------- ------- ---------------------- ---------------- -------------------- ----------
At 30 September 2021 8.07 597.46 294.42 899.95
--------------------------------- ------- ---------------------- ---------------- -------------------- ----------
Share premium Retained earnings
Share capital Total
---------------------------------
Note EURm EURm EURm EURm
--------------------------------- ------- ---------------------- ---------------- -------------------- ----------
At 1 October 2019 4.23 131.21 320.01 455.45
Net profit for the year - - 10.68 10.68
--------------------------------- ------- ---------------------- ---------------- -------------------- ----------
Total comprehensive income - - 10.68 10.68
Contributions and
distributions:
Associated share issue costs - 0.03 - 0.03
Dividends paid 3 - - (18.18) (18.18)
--------------------------------- ------- ---------------------- ---------------- -------------------- ----------
At 30 September 2020 4.23 131.24 312.51 447.98
--------------------------------- ------- ---------------------- ---------------- -------------------- ----------
Notes to the Company Accounts
1. Accounting policies
Basis of preparation
These financial statements were prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101").
In preparing these financial statements, the Company applies the
recognition, measurement and disclosure requirements of
international accounting standards in conformity with the
requirements of the Companies Act 2006, but makes amendments where
necessary in order to comply with Companies Act 2006 and has set
out below where advantage of the FRS 101 disclosure exemptions has
been taken.
Disclosure exemptions adopted
In preparing the financial statements the Company has taken
advantage of all applicable disclosure exemptions conferred by FRS
101. Therefore the financial statements do not include:
-- certain comparative information as otherwise required by EU
endorsed IFRS;
-- certain disclosures regarding the Company's capital;
-- a statement of cash flows and related notes;
-- the effect of future accounting standards not yet
adopted;
-- the disclosure of the remuneration of key management
personnel; and
-- disclosure of related party transactions with other wholly
owned members of the Tritax Eurobox plc Group.
In addition, and in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures are
included in the Company's consolidated financial statements. The
financial statements do not include certain disclosures in respect
of:
-- financial instruments; and
-- fair value measurement other than certain disclosures
required as a result of recording financial instruments at fair
value.
Principal accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the periods presented, unless otherwise
stated. No newly applicable accounting standards for the current
year had any material impact on the Company.
Currency
The Company financial statements are presented in Euro which is
also the Company's functional currency.
Dividends payable for Shareholders
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the Shareholders
at an Annual General Meeting.
Financial assets and financial liabilities
Please refer to sections 4.4.1 and 4.4.2 of the Summary of
significant accounting policies of the Group accounts.
Investment in subsidiaries
The investment in subsidiary companies is included in the
Company's Balance Sheet at cost less provision for impairment.
Significant accounting judgements, estimates and assumptions
The preparation of the Company's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability
affected in future periods. There were no significant accounting
judgements, estimates or assumptions in preparing the financial
statements.
2. Taxation
30 September 30 September
2021 2020
EURm EURm
------------------- --------------- ---------------
UK corporate tax - -
------------------- --------------- ---------------
The UK corporation tax charge of EURnil reflects the Company's
intention to declare sufficient "qualifying interest distributions"
to fully offset its "qualifying interest income" in the year .
The UK corporation tax rate for the financial year is 19%.
Accordingly, this rate has been applied in the measurement of the
Company's tax liability at 30 September 2021.
3. Dividends paid
Please refer to note 13 of the Group accounts.
4. Investment in subsidiaries
30 September 30 September 2020
2021 EURm
EURm
---------------------------------------------- --------------- --------------------
At the beginning of the year 316.32 240.84
Increase in investments via share purchase 166.52 76.69
Disposals in the year (23.43) -
Impairment in the year (1.20) (1.21)
---------------------------------------------- --------------- --------------------
At the end of the year 458.21 316.32
---------------------------------------------- --------------- --------------------
The Company has the following subsidiary undertakings as at 30
September 2021:
Principal activity Country of incorporation Ownership %
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Spain) Holdco, S.L. Investment Holding Company Spain 100%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox Barcelona SLU Property Investment Spain 100%
---------------------------------------- ------------------------------ ---------------------------- --------------
Eurobox Italy Holdco Limited Investment Holding Company Jersey 100%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Fondo Minerva Eurobox Italy** Property Investment Italy 100%
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Belgium) Holdco NV Investment Holding Company Belgium 100%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Panton Kortenberg Vastgoed NV Property Investment Belgium 100%
---------------------------------------- ------------------------------ ---------------------------- --------------
Rumst Logistics NV Property Investment Belgium 100%
---------------------------------------- ------------------------------ ---------------------------- --------------
Rumst Logistics II NV Property Investment Belgium 100%
---------------------------------------- ------------------------------ ---------------------------- --------------
Rumst Logistics III NV Property Investment Belgium 100%
---------------------------------------- ------------------------------ ---------------------------- --------------
Pakobo NV Property Investment Belgium 100%
---------------------------------------- ------------------------------ ---------------------------- --------------
LCP Nivelles DC NV Property investment Belgium 100%
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax EuroBox (Wunstorf) Holdco Investment Holding Company United Kingdom 100%*
Limited
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Germany) Holdco Investment Holding Company United Kingdom 100%*
Limited (formerly known as Tritax
Eurobox (Netherlands) Propco
Limited)
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax EuroBox (Bochum) Propco GmbH Property Investment Germany 94.9%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax EuroBox (Peine) Propco GmbH Property Investment Germany 94.9%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Dietz Logistik 33. Grundbesitz GmbH Property Investment Germany 89.9%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Bremen I) Propco GmbH Property Investment Germany 89.9%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Bremen II) Propco Property Investment Germany 89.9%*
GmbH
---------------------------------------- ------------------------------ ---------------------------- --------------
Dietz Logistik 26. Grundbesitz GmbH Property Investment Germany 89.9%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Dietz Logistik 44. Grundbesitz GmbH Property Investment Germany 89.9%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Strykow) Propco sp. z Property Investment Poland 100%*
o.o.
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Breda) PropCo B.V. Property Investment The Netherlands 100%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Oberhausen) Propco Property Investment The Netherlands 100%*
B.V.
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax Eurobox (Gothenburg) Propco AB Property Investment Sweden 100%*
---------------------------------------- ------------------------------ ---------------------------- --------------
Tritax EuroBox (Sweden) Holdco Investment Holding Company United Kingdom 100%*
Limited (formerly known as Tritax
Eurobox (Netherlands) Holdco
Ltd)
---------------------------------------- ------------------------------ ---------------------------- --------------
* These are direct subsidiaries of the Company.
** The day-to-day operations of Fondo Minerva Eurobox Italy are
managed by Savills IM ("Savills") in accordance with the
requirements of the Italian REIF regime. The Company has the power
to replace Savills with another operator and therefore considers
the investment to be a subsidiary under IFRS 10.
The registered addresses for the subsidiaries across the Group
are consistent based on their country of incorporation and are as
follows:
Spain entities: Calle Maria Auxiliadora, 5, Local 10, 29602,
Marbella, Málaga, Spain
Jersey entities: 26 New Street, St Helier, Jersey JE2 3RA
Italy entities: Savills Investment Management SGR S.p.A., Fondo
Minerva, Via San Paolo 7, 20121 Milano, Italy
Belgium entities: Brussels Capital Region at 1050 Brussels,
Avenue Louise 209A
German entities: Darmstädter Straße 246, 64625 Bensheim, Germany
and Eschersheimer Landstraße 14, 603 22 Frankfurt am Main
Poland entities: Warsaw, ul. Pi kna 18, 05-077 Warsaw,
Poland
The Netherlands entities: Hoogoorddreef 15, 1101BA Amsterdam,
the Netherlands
United Kingdom entities: 6 Duke Street St James's, London SW1Y
6BN, United Kingdom
5. Trade and other receivables
30 September 30 September 2020
2021 EURm
EURm
------------------------------------------- --------------- --------------------
Amounts receivable from Group companies 642.94 470.14
Other receivables 5.54 0.76
------------------------------------------- --------------- --------------------
648.48 470.90
------------------------------------------- --------------- --------------------
All amounts receivable from Group companies are documented under
term loans with maturity exceeding three years, with an option to
extend for a further five years. All borrowings are unsecured and
are charged at 3% - 4%. Interest is generally payable quarterly
and, therefore, is classified as current assets.
30 September 30 September 2020
2021 EURm
EURm
----------------------------- --------------- --------------------
Current assets 13.55 4.38
Non-current assets 634.93 466.52
----------------------------- --------------- --------------------
648.48 470.90
----------------------------- --------------- --------------------
6. Cash held at bank
30 September 30 September 2020
2021 EURm
EURm
----------------------------- --------------- --------------------
Cash held at bank 291.56 3.52
----------------------------- --------------- --------------------
7. Trade and other payables
30 September 30 September 2020
2021 EURm
EURm
----------------------------- --------------- --------------------
Trade and other payables 5.75 2.13
Accruals 0.43 0.09
----------------------------- --------------- --------------------
6.18 2.22
----------------------------- --------------- --------------------
8. Loans and borrowings
All external borrowings of the Group are held by the Company.
Please refer to note 18 of the Group accounts for further
details.
9. Share capital
Please refer to note 24 of the Group accounts.
10. Related party transactions
The Company has taken advantage of the exemption not to disclose
transactions with other wholly owned members of the Group as the
Company's own financial statements are presented together with its
consolidated financial statements.
Below are the amounts received by the companies which are not
wholly owned:
30 September
2021 30 September 2020
Income received from Group companies EURm EURm
--------------------------------------------------------------------- ----------------- ---------------------
Tritax EuroBox (Bochum) Propco GmbH 0.98 1.22
Tritax EuroBox (Peine) Propco GmbH 2.64 3.49
Dietz Logistik 33. Grundbesitz GmbH 1.20 1.83
Tritax Eurobox (Bremen I) Propco GmbH 0.53 0.64
Tritax Eurobox (Bremen II) Propco GmbH 0.57 0.69
Dietz Logistik 26. Grundbesitz GmbH 1.48 -
Dietz Logistik 44. Grundbesitz GmbH 1.07 -
--------------------------------------------------------------------- ----------------- ---------------------
8.47 7.87
--------------------------------------------------------------------- ----------------- ---------------------
Below are the amounts owed by the companies which are not wholly owned:
---------------------------------------------------------------------------------- ---- ---------------------
Less than More than one year
Amount owed from Group companies as at 30 September 2021 one year EURm
EURm
--------------------------------------------------------------------- ----------------- ---------------------
Tritax EuroBox (Bochum) Propco GmbH 0.04 24.42
Tritax EuroBox (Peine) Propco GmbH - 64.74
Dietz Logistik 33. Grundbesitz GmbH - 29.10
Tritax Eurobox (Bremen I) Propco GmbH - 13.16
Tritax Eurobox (Bremen II) Propco GmbH - 13.86
Dietz Logistik 26. Grundbesitz GmbH - 91.53
Dietz Logistik 44. Grundbesitz GmbH - 84.30
--------------------------------------------------------------------- ----------------- ---------------------
0.04 321.11
--------------------------------------------------------------------- ----------------- ---------------------
Amount owed from Group companies as at 30 September 2020 Less than More than
one year one year
EURm EURm
------------------------------------------------------------ ------------ ------------
Tritax EuroBox (Bochum) Propco GmbH 0.04 24.42
Tritax EuroBox (Peine) Propco GmbH - 67.74
Dietz Logistik 33. Grundbesitz GmbH - 31.10
Tritax Eurobox (Bremen I) Propco GmbH - 13.16
Tritax Eurobox (Bremen II) Propco GmbH - 14.86
------------------------------------------------------------ ------------ ------------
0.04 151.28
------------------------------------------------------------ ------------ ------------
For all other related party transactions please refer to note 26
of the Group accounts.
11. Directors' remuneration
Please refer to note 9 of the Group accounts.
12. Subsequent events
Please refer to note 28 of the Group accounts.
NOTES TO THE EPRA AND OTHER KEY PERFORMANCE INDICATORS
(UNAUDITED)
1. EPRA Earnings Per Share
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Total comprehensive income (attributable to Shareholders) 104.83 44.79
---------------- ----------------
Adjustments to remove:
---------------- ----------------
Changes in fair value of investment properties (106.46) (38.57)
---------------- ----------------
Deferred tax adjustment 23.62 8.38
---------------- ----------------
Changes in fair value of interest rate derivatives 0.05 0.03
------------------------------------------------------------- ---------------- ----------------
Gain on disposal of investment property (7.33) (0.83)
------------------------------------------------------------- ---------------- ----------------
Profits to calculate EPRA Earnings Per Share 14.71 13.80
------------------------------------------------------------- ---------------- ----------------
Weighted average number of Ordinary Shares 535,144,885 422,727,273
---------------- ----------------
EPRA Earnings Per Share - basic and diluted 2.75 cents 3.26 cents
---------------- ----------------
2. EPRA NAV measures
The Group has elected to early adopt the three new measures of
net asset value: EPRA Net Reinvestment Value ("NRV"), EPRA Net
Tangible Assets ("NTA") and EPRA Net Disposal Value ("NDV") for the
year ended 30 September 2020. The Group considers EPRA NTA to be
the most relevant EPRA NAV measure for the Group, replacing our
previously reported EPRA NRV and EPRA NRV per share metrics for the
year ended 30 September 2021. We are now reporting EPRA NTA as our
primary NAV measure alongside Basic NAV. The prior year comparative
figures have also been recomputed in line with the new EPRA NTA.
EPRA NTA is calculated as net assets per the Consolidated Statement
of Financial Position excluding cumulative fair value adjustments
for debt-related derivatives and deferred tax adjustment. This
excludes transaction costs (Real Estate Transfer Tax and
purchaser's costs).
30 September 2021 Current measures Previously reported measures
------------------------------- ------ ------------------------------------------ ---------------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NAV EPRA NNNAV
EURm EURm EURm EURm EURm
------------------------------- ----------- ----------- ----------- ----------- --------------- ----------------
NAV attributable to Shareholders 1,053.50 1,053.50 1,053.50 1,053.50 1,053.50
Mark-to-market adjustments of derivatives (0.05) (0.05) - 2.42 -
Deferred tax adjustment 33.06 33.06 - 33.06 -
Transaction costs(1) 60.84 - - - -
NAV 1,147.35 1,086.51 1,053.50 1,088.98 1,053.50
-------------------------------------------- ----------- ----------- ----------- --------------- ----------------
NAV per share in Euro 1.42 1.35 1.31 1.35 1.31
-------------------------------------------- ----------- ----------- ----------- --------------- ----------------
(1) EPRA NTA and EPRA NDV reflect IFRS values which are net of
transaction costs (RETT and purchaser's costs). Transaction costs
are added back when calculating EPRA NRV.
30 September 2020 Current measures Previously reported measures
------------------------------- ------ ------------------------------------------ ---------------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NAV EPRA NNNAV
EURm EURm EURm EURm EURm
------------------------------- ----------- ----------- ----------- ----------- --------------- ----------------
NAV attributable to Shareholders 503.91 503.91 503.91 503.91 503.91
Mark-to-market adjustments of derivatives (0.09) (0.09) - 2.38 -
Deferred tax adjustment 12.49 12.49 - 12.49 -
Transaction costs(1) 34.19 - - - -
NAV 550.50 516.31 503.91 518.78 503.91
-------------------------------------------- ----------- ----------- ----------- --------------- ----------------
NAV per share in Euro 1.30 1.22 1.19 1.23 1.19
-------------------------------------------- ----------- ----------- ----------- --------------- ----------------
(1) EPRA NTA and EPRA NDV reflect IFRS values which are net of
transaction costs (RETT and purchaser's costs). Transaction costs
are added back when calculating EPRA NRV .
3. EPRA Net Initial Yield ("NIY") and EPRA "Topped Up" NIY
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Investment property 1,281.38 837.90
---------------- ----------------
Less: development properties (24.03) -
--------------------------------------------------- ---------------- ----------------
Completed property portfolio 1,257.35 837.90
---------------- ----------------
Allowance for estimated purchasers' costs 60.84 34.19
--------------------------------------------------- ---------------- ----------------
Gross up completed property portfolio valuation
(B) 1,318.19 872.09
--------------------------------------------------- ---------------- ----------------
Annualised cash passing rental income 51.06 39.24
---------------- ----------------
Property outgoings (1.72) (0.98)
--------------------------------------------------- ---------------- ----------------
Annualised net rents (A) 49.34 38.26
---------------- ----------------
Contractual increases for fixed uplifts 0.56 1.41
--------------------------------------------------- ---------------- ----------------
Topped up annualised net rents (C) 49.90 39.67
--------------------------------------------------- ---------------- ----------------
EPRA Net Initial Yield (A/B) 3.74% 4.39%
---------------- ----------------
EPRA Topped Up Net Initial Yield (C/B) 3.79% 4.55%
--------------------------------------------------- ---------------- ----------------
4. EPRA vacancy rate
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Annualised estimated rental value of vacant
premises 1.78 2.21
---------------- ----------------
Portfolio estimated rental value (1) 53.40 40.65
----------------------------------------------- ---------------- ----------------
EPRA vacancy rate 3.33% 5.43%
----------------------------------------------- ---------------- ----------------
(1) Excludes land held for development.
All vacant space is currently covered by rental guarantees.
5. EPRA Cost Ratio and Adjusted EPRA Cost Ratio
Year ended Year ended
30 September 30 September
2021 2020
EURm EURm
Property operating costs 1.34 0.89
---------------- ----------------
Administration expenses 12.22 10.73
---------------- ----------------
Net service charge costs 0.38 0.09
---------------- ----------------
Other operating income (0.55) (0.46)
---------------------------------------------------- ---------------- ----------------
Total costs including vacant property costs
(A) 13.39 11.25
---------------- ----------------
Vacant property costs (0.38) (0.09)
---------------------------------------------------- ---------------- ----------------
Total costs excluding vacant property costs
(B) 13.01 11.16
---------------- ----------------
Gross rental income - per IFRS (C) 43.89 36.00
---------------------------------------------------- ---------------- ----------------
Total EPRA Cost Ratio (including vacant property
costs) (A/C) 30.51% 31.25%
---------------------------------------------------- ---------------- ----------------
Total EPRA Cost Ratio (excluding vacant property
costs) (B/C) 29.64% 31.00%
---------------------------------------------------- ---------------- ----------------
Gross rental income including rental guarantee
(D) 47.07 36.00
---------------- ----------------
Total EPRA Cost Ratio (including vacant property
costs) (A/D) 28.45% 31.25%
---------------- ----------------
Total EPRA Cost Ratio (excluding vacant property
costs) (B/D) 27.64% 31.00%
---------------- ----------------
There were no overheads nor operating expenses capitalised in
the year in line with IFRS (2020: EURnil).
6. Capital expenditure
30 September 30 September
2021 2020
EURm EURm
Acquisition(1) 372.56 105.86
--------------- ---------------
Development(1) 19.81 6.22
--------------- ---------------
Investment properties(1) :
--------------- ---------------
Incremental lettable space 1.10 1.43
--------------- ---------------
Tenant incentives(2) 3.01 2.14
--------------- ---------------
Other material non-allocated types of expenditure(3) (2.49) (3.90)
--------------- ---------------
Total 393.99 111.75
--------------- ---------------
(1) See note 14.
(2) Fixed rental uplift and tenant lease incentives after
adjusting for amortisation on rental uplift and tenant lease
incentives.
(3) Licence fees and rental guarantees.
The Group has no interest in joint ventures.
7. Total Return
Year ended Year ended
30 September 30 September
2021 2020
cents cents
Opening EPRA NTA 122.14 113.96
---------------- ----------------
Closing EPRA NTA(1) 134.69 122.14
---------------- ----------------
Growth in EPRA NTA 12.55 8.18
---------------- ----------------
Dividends paid 4.85 4.30
---------------- ----------------
Total growth in EPRA NTA plus dividends paid 17.40 12.48
---------------- ----------------
Total Return(1) 14.25% 10.95%
---------------- ----------------
(1) Total Return for 30 September 2020 was 11.28% using the
previous EPRA NRV at 130.23 cents.
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FR LQLLBFLLEFBB
(END) Dow Jones Newswires
December 07, 2021 02:00 ET (07:00 GMT)
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