TIDMEBOX TIDMBOXE
RNS Number : 6429V
Tritax EuroBox PLC
05 December 2023
Full-year results for
the year ended
30 September 2023
05 December 2023
Delivered good progress on our strategic priorities of growing
income, lowering the cost ratio and paying a fully covered
dividend. Portfolio valuation stable over H2, with good momentum in
the disposal programme expected to reduce leverage further.
Full-year 2023 key figures
Financial performance
================================== ================ =============== =============
12 months to: 30 September 30 September Change
2023 2022
Rental income EUR68.1m EUR57.9m 17.6%
Adjusted earnings per share
(EPS)(1) 5.51 cents 4.24 cents 30.0%
Basic EPS(1) (27.68) cents 7.28 cents n/a
Dividend per share 5.00 cents 5.00 cents -
Total Return (22.5)% 6.0% (28.5) pts
Portfolio value(2) EUR1,561.9m EUR1,765.6m (14.5)%
EPRA net tangible assets (NTA)
per share EUR1.02 EUR1.38 (26.1)%
IFRS NAV per share EUR0.99 EUR1.32 (25.0)%
Loan to value (LTV) ratio(3) 46.4% 35.2% 11.2 pts
Annualised rental income(4) EUR76.3m EUR74.3m 2.7%
================================== ================ =============== =============
Operational performance
================================== ================ =============== =============
30 September 30 September 31 March
2023 2022 2023
FY23 FY22 H1 23
Like-for-like rental growth(5) 4.5% 3.6% 2.8%
Rent collection 100% 100% 100%
Weighted average unexpired 7.9 years 8.0 years 7.9 years
lease term(6)
EPRA vacancy rate 5.5% 0.3% 5.4%
Adjusted EPRA cost ratio(7) 24.2% 29.5% 25.6%
Average cost of debt 1.3% 1.5% 1.2%
Like-for-like estimated rental
value (ERV) growth(8) 6.5% 8.2% 3.4%
================================== ================ =============== =============
Chairman's commentary
Robert Orr, Chairman of Tritax EuroBox plc, commented:
"Over the past 12 months we have made good progress on
delivering the strategic priorities we outlined a year ago. We have
generated strong rental income growth and our cost ratio is now
within our target range. This improved operational performance has
led to a substantial increase in adjusted earnings and a fully
covered dividend for the year.
"We have not been immune to the rapid increase in interest
rates, which has adversely impacted our portfolio valuation over
the year. However, the marginal decline in the second half and
pricing of recent sales broadly in line with book values, indicates
some market stabilisation. Further planned disposals are expected
to reduce leverage as we move through 2024.
"While mindful of the ongoing challenging geo-political and
macro-economic backdrop, our high-quality portfolio and strong
customer base mean the Company remains well placed to benefit from
the structural tailwinds and favourable underlying market dynamics
in the European logistics sector."
FY23 full-year results overview
Rental income growth and cost efficiencies supporting higher
Adjusted Earnings and a covered dividend
-- Rental income of EUR68.1 million, up 17.6%, reflecting the
full-year effect of prior year acquisitions, rent indexations,
asset management and development activity.
-- Like-for-like(5) rental growth was 4.5% (7.8% including new
income from the Barcelona and Strykow extensions).
-- Adjusted EPRA Cost Ratio(7) of 24.2% (FY22: 29.5%), in line
with our target range of 20-25%, benefiting from higher income and
lower management fee.
-- Adjusted EPS of 5.51 cents, up 30%.
-- Dividend per share of 5.00 cents was 110.2% covered by Adjusted EPS for the full year.
Investment portfolio let to strong customers on long-term,
inflation-linked leases
-- Portfolio value(2) of EUR1,561.9 million (FY22: EUR1,765.6
million), with 12-month like-for-like reduction of 14.5% primarily
due to significant outward yield shift across the sector, partly
offset by rental growth. H2 FY23 valuation decline of 0.3%.
-- Despite a good operational performance, the fall in portfolio
value led to a decline in NTA to EUR1.02 (FY22: EUR1.38) and a
negative Total Return of 22.5% (FY22: 6.0%).
-- Portfolio reversion of 17.6% or EUR13.4 million, reflecting a
like-for-like increase in portfolio ERV of 6.5%.
-- 97% of leases subject to annual rental increases, with 81% linked to inflation.
-- Increase in EPRA vacancy rate to 5.5% (FY22: 0.3%) reflecting
the completion of speculative forward fundings in Sweden and Italy,
and a lease expiry in Poland, partially offset by new lettings.
Asset management, indexation and development adding EUR6.3
million to annualised rental income (4)
-- Completed two pre-let developments and four speculative
forward fundings, adding 224,763 sqm of new space.
-- Completed a 109,083 sqm extension in Barcelona, adding EUR2.3
million to annual rent, and commenced an 8,841 sqm extension in
Poland, increasing the annual rent by EUR0.5 million.
-- Commenced a 23,000 sqm speculative development in Oberhausen,
Germany; completion targeted for July 2024.
-- Signed three new leases totalling EUR4.3 million of annual
rent, an increase of EUR0.6 million above previous rent or
guarantees.
-- Sales of asset in Hammersbach in August for c.EUR65 million
and, post period end, two assets in Bochum and Malmö for c.EUR47
million and c.EUR28 million respectively. All three were either
broadly in line or above book value, and aligned with our stated
disposal strategy.
-- Ongoing integration of ESG objectives into operational
business, including completion of two solar PV installations,
adding a total of 2.8 MW to the portfolio, with a further six
projects in progress.
Robust balance sheet with low cost of debt
-- 100% of debt with fixed rates or caps, with an average cost of debt of 1.30% for FY23.
-- 3.5-year weighted maturity, with earliest refinancing in Q4 2025.
-- EUR172.5 million of undrawn debt facilities as at year end.
-- Loan to value (LTV) ratio(3) of 46.4% remains higher than we
would like, with the disposal proceeds offset by the portfolio
valuation decline, development capital expenditure and other
working capital effects.
-- Covenant headroom with LTV(3) of 46.4% and interest cover of
4.8x, versus covenants of 65% and 1.5x.
-- Taking into account the post-period-end disposals at Bochum
and Malmö, the pro-forma LTV decreases to 44.0%.
Notes
1 See note 12 to the condensed financial statements for
reconciliation.
2 Valuation under IFRS (excluding rental guarantees), this
includes assets held for sale.
3 As per KPI definition.
4 Contracted rent, on an annualised basis, at the reporting
date. Including rental guarantees and licence fee.
5 Excluding extensions at Barcelona and Strykow. Including
extensions, like-for-like rental growth is 7.8%.
6 Weighted average unexpired lease term to break is 7.9 years
and weighted average unexpired lease term to expiry is 9.6
years.
7 Including licence fee income and rental guarantees.
8 Like-for-like ERV growth for 12 months for FY23 and FY22 and
for six months for H1 23.
Presentation for investors and analysts
A Company presentation for analysts and investors will take
place via a live webcast at 09.00am (GMT) today. To view the live
webcast, please register via this link:
Tritax EuroBox plc - Full-year results 2023
Analysts and investors will also be able to listen to the event
via a moderated conference call using the following details:
Phone number: +44 (0) 33 0551 0200
Participant access: quote ' Tritax Full Year Results
The presentation will also be accessible on-demand later in the
day from the Company website:
tritaxeurobox.co.uk/investors/results-and-presentations/ .
Further information
Tritax EuroBox plc
+44 (0) 20 8051 5070
Phil Redding - CEO
Mehdi Bourassi - CFO
Charles Chalkly - Investor Relations
Kekst CNC (Media enquiries)
Tom Climie / Guy Bates
+44 (0) 7760 160 248 / +44 (0) 7581 056 415
tritax@kekstcnc.com
Notes:
Further information on the Company is available at:
tritaxeurobox.co.uk
The Company's LEI is: 213800HK59N7H979QU33.
Chairman's statement
Over the past 12 months we have made good progress on delivering
the strategic priorities we outlined a year ago. Rental income has
increased by 17.6% and our Adjusted EPRA Cost Ratio at 24.2% is now
within our target range. This improved operational performance has
led to a 30.0% increase in Adjusted Earnings and the dividend
110.2% covered for the full year. In addition, we expect our
ongoing disposal programme to reduce our loan to value ratio
towards our preferred percentage range in the low 40s in the year
ahead.
Supportive structural trends throughout our five-year
history
The past year marked the fifth anniversary of Tritax EuroBox
plc, a five-year period that has seen consistently supportive
underlying occupier market fundamentals against, more recently, a
significant change in economic and investment market
conditions.
Since its IPO in 2018, the combination of positive structural
demand drivers and the constrained supply of modern warehouse space
has generated strong rental growth across European logistics
markets. These strong market fundamentals attracted considerable
amounts of capital into the sector, further encouraged by
supportive debt markets, leading to a corresponding decline in
property yields and increase in capital values.
More recently, in response to central banks sharply raising
interest rates to combat higher levels of inflation, property
yields have shifted upwards to reflect the higher cost of capital,
with asset values subsequently falling. Following an extended
period of benign economic conditions, these fluctuations are a
reminder that real estate markets are inherently cyclical in
nature.
Despite these market swings, the Company's strategy - and its
delivery - has remained consistent. Over the past five years, we
have focused on assembling a portfolio of best-in-class, modern
logistics assets that are mission-critical to our customers, with
leading ESG credentials, and concentrated in major distribution
corridors in key European markets. Our approach, based on the
ownership and management of a stabilised portfolio of core assets,
with a carefully managed exposure to value-add and development
risk, enables the Company to deliver income growth consistently
through the economic cycle.
Our high-quality portfolio remains well placed to capitalise on
structural drivers
The portfolio is now valued at EUR1.56 billion with a rent roll
of EUR76.3 million and home to 35 customers, including
multi-national organisations such as Mango, Amazon, Puma and Lidl.
The assets are let on primarily long-term leases with annual
uplifts linked to inflation, generating predictable and regular
growth in rental income, which serves to support the fully covered
dividend paid to Shareholders.
We remain of the view that the positive tailwinds from
structural demand drivers will continue to benefit the Company for
some time to come. The impact of increasing online shopping
penetration, the need to build greater resilience into supply
chains, and the aim of reducing the environmental impact of
distribution operations will continue to generate strong demand for
high-quality, sustainable warehouse space. The portfolio remains
well positioned to benefit from these trends.
That said, we are also cognisant of the changing market context
and the challenges this presents. While the central focus of our
strategy remains constant, aimed at harnessing these supportive,
long-term structural drivers, we have adapted our priorities to
ensure the business remains appropriately positioned in this
altered and evolving environment.
Over the past 12 months the Company has focused on capturing the
income growth opportunities embedded within the existing portfolio,
improving operational efficiency, growing earnings to deliver a
covered dividend, and taking action to maintain a strong balance
sheet position through selected disposals. During the period, good
progress has been made on these priorities and we remain on track
to achieve our objectives.
Financial performance driven by good progress on our strategic
priorities
Rental income increased to EUR68.1 million per annum (FY22:
EUR57.9 million) and like-for-like rental growth was 4.5% (7.8% if
new income from completed extensions is included). The Company also
continued to benefit from the revised Investment Management
Agreement that reduced the Manager fees payable by the Company,
with the Adjusted EPRA Cost Ratio declining to 24.2% from 29.5%
over the year. These activities contributed to a 30.0% increase in
Adjusted EPS to 5.51 cents (FY22: 4.24 cents).
We declared quarterly dividends totalling 5.00 cents per share
for the period, in line with the previous year. The dividend was
110.2% covered by Adjusted EPS.
However, the Company continues to be affected by the decline in
asset values that is impacting the entire European logistics
sector. The portfolio was independently valued by CBRE at
EUR1,561.9 million at the period end (FY22: EUR1,765.6 million),
representing a like-for-like valuation reduction of 14.5% for the
full year. Signs of stabilisation are emerging, with a deceleration
in the rate of decline from a reduction of 14.7% in H1 to a fall of
0.3% in H2. This resulted in EPRA NTA per share of EUR1.02, down
26% (FY22: EUR1.38).
One of the key priorities of the business is to maintain balance
sheet strength. Earlier in the year we commenced a programme of
planned disposals to lower the Company's leverage and in August
announced the sale of an asset in Hammersbach (Germany) for c.EUR65
million. Post period end, we announced the sales of assets in
Bochum (Germany) for c.EUR47 million and in Malmö (Sweden) for
c.EUR28 million. Bochum was broadly in line with valuation and
Malmö was significantly ahead. These transactions brought gross
sales signed so far to c.EUR139 million.
However, the LTV of 46.4% (pro forma 44.0% post the Bochum and
Malmö disposals) remains above where we would like it to be at this
point in the cycle. This is due to the lower portfolio valuation,
capital expenditure on developments and movements in working
capital offsetting the benefit of the sales proceeds. Further
disposals are planned in the months ahead.
The Company continues to benefit from a low average cost of debt
of 1.30% due to the fixed or capped rates on all its borrowings and
is not exposed to any near-term refinancings. In the medium term,
the Company expects to refinance the RCF and the bond ahead of
their respective maturities in October 2025 and June 2026.
Advancement of our ESG strategy and solar PV installations
During the year, we have made good progress with our ESG
strategy, with several initiatives announced over the past 12
months. At the Interim Results in May we launched our new ESG
targets. These include an accelerated commitment to achieve net
zero carbon across all aspects of our business by 2040, rather than
the previously stated 2050 target.
Our targets, which will be reviewed annually, will help drive
further improvement for the benefit of our stakeholders and help us
to keep pace with the evolving regulatory and market environment.
This will ensure our approach is evidence- and data-led, and that
we accurately measure and disclose our impact.
We have increased the renewable electricity generated by solar
schemes on our assets, with our portfolio's generating capacity now
10.3 MW across arrays on eight buildings. We have made good
progress on our plans to increase this further over the coming
year, with applications submitted to commence schemes on three
further assets, which would add an extra c.9 MW of capacity. In
addition, there are three other projects in the pipeline.
As previously reported, we held the first meeting of our ESG
Board Committee, chaired by the Board ESG Champion, Eva -- Lotta
Sjöstedt. This provides a dedicated forum for the Board and
representatives of the Manager to oversee and review the progress
in delivering our ESG objectives.
Also reported earlier in the year, we reviewed the Board and
Committee composition and announced Sarah Whitney's appointment as
Senior Independent Director (SID) with effect from 6 December 2022.
Sarah has taken on the role from Keith Mansfield, who continues to
make an important contribution as a Non-Executive Director and
Chair of the Audit & Risk Committee.
In February 2023, the Management Engagement Committee approved
the appointment of CBRE as the Company's independent valuer,
replacing JLL. The position had been held by JLL since the
Company's IPO in 2018 and the Board felt a rotation of this
important role was appropriate at this time.
Outlook
The past 12 months have been characterised by a challenging
geo-political and macro-economic backdrop. This has adversely
impacted property investment markets and occupier sentiment across
Europe. However, inflation in Continental Europe is now on a
downward trajectory and interest rates are forecast to have peaked.
This increased visibility is leading to signs of stabilisation in
asset values, as demonstrated by the marginal fall in our portfolio
valuation over the second half of the financial year and recently
completed disposals broadly in line with book values.
While we expect investors to remain cautious and transaction
volumes relatively low in the near term, we anticipate the positive
structural drivers and strong market fundamentals of the logistics
sector will support investor appetite and liquidity as we move
through 2024.
In addition, while take-up of warehouse buildings has fallen
over the past nine months, the availability of modern, sustainable
logistics space remains low and the potential for a material supply
increase limited. We expect these dynamics to keep vacancy rates at
low levels and support positive rental growth, albeit at more
normalised levels versus the very high rates seen recently.
The Board remains confident that the high-quality portfolio and
strong customer base means the Company is well placed to benefit
from the structural tailwinds and favourable underlying market
dynamics that will continue to support the performance of the
European logistics sector.
Despite the challenging market environment during the past year,
the Company has delivered good progress on the strategic priorities
set out 12 months ago. The Board continues to believe the focus on
driving earnings, paying a fully covered dividend, and maintaining
balance sheet strength through the ongoing programme of disposals,
remains appropriate and will deliver value to Shareholders in the
long term.
Our market
Structural drivers continue to support the occupier market
Our market is characterised by strong occupier demand, limited
supply of available space in core markets and high barriers to
developing new assets in prime locations. These favourable market
dynamics are supporting rental growth, with vacancy rates remaining
low.
Good rental growth across core Continental European markets
Structural trends such as digitalisation and online retail
growth are being amplified by growing urbanisation. In tandem,
supply chains are evolving as organisations seek improved
resilience and reliability, and demands for sustainability are
increasing, driven by shifting stakeholder and societal
expectations, including the emergence of circular economies. These
themes are continuing to shape the demand-supply dynamics of the
logistics sector.
Long-term demand drivers
Global events such as the Covid-19 pandemic and recent
heightened geopolitical risk have accelerated demand in the short
term. Over the longer term, demand is being driven by three
underlying factors:
1) Growth of e-commerce: Warehouse space is fundamental to both
successfully fulfilling e-commerce sales and doing so at a cost
that allows companies to operate profitably. Companies typically
require large, flexible, modern and well-located properties to
deliver orders and manage returns rapidly and efficiently .
2) Creating resilient supply chains: Companies are reinforcing
their supply chains to ensure their efficiency and resilience to
external shocks. Measures used to do this include adopting the
latest supply chain planning tools; reviewing manufacturing
locations and transportation networks; and holding more critical
stock closer to customers and end-users.
3) Drive towards more sustainable real estate and operations:
Companies are looking for their logistics real estate to help meet
their ESG objectives. In addition to reducing their environmental
impacts - through incorporating clean energy generation, low-carbon
technologies, and energy efficiencies - occupiers want a workspace
that promotes employee wellbeing to help them attract and retain
staff. Meanwhile, decarbonising transportation has driven increased
demand for features such as EV charging points .
We believe these trends will continue to favour the modern,
high-quality and well-located buildings we own.
High barriers to development in prime markets
The availability of logistics space in many prime sub-markets
continues to be limited, and the barriers to developing new
warehouses in attractive locations remain high. These barriers
include:
1) Availability of land: Sourcing new sites for assets continues
to become more difficult. 95%[1] of developers highlight it as an
issue, up from 76% in 2022.
2) Difficulty securing planning consents: Developers are also
finding it increasingly difficult to obtain permission to develop
land. 83% underlined the length of the zoning/permit process as an
important restriction, while 82% note that increased ESG
requirements are an important issue when seeking permission for a
development1 .
3) Increased finance and construction costs: Raw material and
labour cost inflation has eased, but development costs overall
remain elevated. Increased finance costs are a further burden that
negatively impact potential development profitability.
Real estate market fundamentals and investment markets
Take-up has moderated across European markets
2023 has seen a healthy level of demand for warehouse space
across Europe despite the challenging macroeconomic backdrop.
Take-up for the 12 months to Q3 2023 totalled 20.7 million sqm,
down 24% year-on-year but in line with pre-Covid-19 levels[2]. The
demand adjustment seen this year reflects a normalisation to more
typical, pre-pandemic levels of activity.
The uncertain market environment has impacted occupier
decision-making, as evidenced by the 2023 Savills/EuroBox European
Logistics Real Estate Census. Rising costs remain a key concern and
39% of respondents suggested they have scaled back or delayed
decisions by one to two years. Leasing volumes also continue to be
impacted by ongoing constraints around the availability of
well-located, high-quality logistics buildings.
Despite these challenges, a wide range of occupiers continue to
commit to new logistics buildings. Retailer, e-commerce, and
manufacturing companies all continued to evolve their warehouse
network and 3PLs have been particularly active in the year. 3PLs
continue to lease properties to satisfy demand driven by their
customers' outsourcing logistics requirements and need to hold
higher levels of buffer stock ([3]) , as well as new business
opportunities such as facilitating the return, repair, and reuse of
goods. Our letting at Dormagen, Germany was evidence of the latter,
where the occupier is using our building to process returns and
repairs of household appliances.
Supply remains constrained in core markets
Development completions slowed to 17.6 million sqm in the 12
months to Q3 2023, down from 19.5 million sqm in the year to Q3
2022. Completions have dropped particularly sharply in Germany,
where year-on-year new supply is down 30% and completions are below
pre-pandemic levels(2) . The limited availability of land,
particularly for very large sites, and challenges associated with
securing planning are especially evident across many of Europe's
core logistics sub-markets. For example, in the Netherlands less
than 50% of new supply in the last 12 months has been delivered
into its nine principal sub-markets(2) .
While pockets of excess speculative development have emerged,
these are typically outside of the main logistics hubs where
availability remains very low. Furthermore, the supply pipeline
across Europe continues to reduce as developers reassess
opportunities in light of the evolving market environment and
higher cost of capital. Looking ahead, this is likely to continue
the mismatch between available supply and occupier requirements in
many of the best locations. These requirements include a heightened
focus on ESG features, energy efficiency and generation, and the
technical building features required to operate more efficient,
productive and resilient supply chains.
Low vacancy in many core logistics markets continues to support
rental growth
Pan-European vacancy remains low by historical standards at just
3.6%(2) . An increasingly diverse picture is, however, beginning to
emerge. While vacancy has ticked up at an aggregate level, it
remains below 3%(2) in countries such as Germany, the Netherlands,
and Belgium. Furthermore, many core logistics sub-markets have
vacancy levels below the national average, which continues to limit
the options for occupiers looking for new space in the most
attractive markets.
A combination of healthy demand and still-constrained supply in
the best locations has contributed to further rental traction in
many sub-markets across Europe. Prime headline rents have risen by
8% on average [4] and, across the year, almost every major
sub-market has experienced rental growth.
While the near-term outlook will continue to be impacted by the
volatile macroeconomic backdrop, we believe the ongoing structural
trends underpinning demand and supply barriers in the best
locations will lead to attractive levels of rental growth in our
markets over the medium term.
Stabilisation of capital markets through the second half of the
year
Transaction activity totalled EUR11.7 billion in Q1-Q3 2023,
down 58%(2) versus the same period in 2022. That said, quarterly
deal volumes have remained relatively flat through 2023(2) despite
central banks continuing to raise interest rates, further impacting
the cost of capital. Lower logistics deal volumes also reflect the
trend across the wider real estate market, which continues to
adjust to the higher cost of capital and return requirements that
currently exists. Logistics real estate accounted for 19% of all
real estate deal volumes year to date which is consistent with
recent years, and up significantly from pre-Covid-19 levels which
were typically around 12%(2) .
A steady flow of transactions continues to provide pricing
discovery, but many buildings have reversionary potential because
of the healthy recent rental growth, which leases have often failed
to fully capture. Pricing for these assets may therefore not
directly reflect the market values reported by CBRE and others
which are a best estimate for a prime, rack-rented building.
Prime yields, as reported by CBRE, have adjusted higher over the
past 18 months but recent quarters have seen increasing signs of
stabilisation. Since March 2023, yields have moved out by 10bps or
fewer in Germany, the Netherlands, and France. Peripheral markets
have seen yields shift by between 20bps and 40bps over the same
period.
The rapid adjustment in yields has helped keep logistics real
estate pricing broadly in line with other asset classes and prices
have stabilised over recent quarters. While the near-term outlook
will continue to be heavily influenced by the macro trends that
currently dominate, we continue to believe logistics real estate
remains a compelling area for investment.
Manager's report
At the start of the financial year, we set out four key
priorities: to capture income growth opportunities embedded within
the existing portfolio; to improve operational efficiencies to
lower the cost ratio; to combine these activities to drive forward
earnings per share and deliver a fully covered dividend for the
year; and to underpin these activities by maintaining a strong
balance sheet position.
Over the past 12 months, the Company has made good progress on
delivering these strategic priorities despite the more challenging
macro-economic and property market backdrop experienced in
Continental Europe throughout the period.
During the year, the effect of sharply higher interest rates
continued to impact investment markets in the form of increased
yields, lower asset values and subdued transaction volumes. Most of
the value adjustments were experienced in the first half of the
financial year, with the modest declines in the second half
reflecting the relatively rapid adjustments already taken and
greater visibility emerging in the macro-economic environment.
In contrast to previous property cycles, occupational market
fundamentals have remained robust, with most markets characterised
by low levels of available modern warehouse space. While occupiers
have become more cautious in response to the challenging economic
conditions, the sector continues to be supported by long-term
structural drivers, low vacancy rates and a limited pipeline of
supply.
The high-quality nature of our assets has enabled the Company to
navigate these tougher market conditions. The property portfolio we
have curated provides resilience through the market cycle and
delivers income growth over the long term. This resilience and
income growth potential are produced by combining high-quality
assets (modern buildings with excellent ESG credentials, located in
sought-after distribution hubs and corridors), with attractive
income characteristics (let on long leases to strong customers with
annual rental uplifts linked to inflation).
Delivering on our strategic priorities
The focus over the past 12 months has been on driving
improvements in operational performance, with a key part of this
being the capture of income growth opportunities embedded within
the existing property portfolio. During the period we successfully
completed several initiatives across a broad spectrum of asset
management, development and leasing activities, which delivered
both new income growth and enhanced capital values.
Over the year, the in-house team, in conjunction with our
locally based asset management and development partners, secured
EUR3.6 million per annum of new rental income, which also
positively impacted corresponding asset valuations. The in-built
uplifts from the index-linked and fixed uplift structures of our
leases produced EUR2.3 million of new rental income, and
represented a significant driver of growth in annualised rental
income, which increased to EUR76.3 million (FY22: EUR74.3 million).
The like-for-like increase in rental income was 4.5% (7.8%
including the extensions in Barcelona and Strykow).
We have also delivered enhancements in operational efficiency,
including the full-year impact of the revised Investment Management
Agreement, effective from August 2022. These improvements
contributed to a reduction in the Adjusted EPRA Cost Ratio to 24.2%
from 29.5% in the prior year. Our Adjusted EPRA Cost Ratio is now
in line with our pan-European peers and within our target range of
20-25%. We continue to pursue opportunities to reduce the cost base
to enable us to move towards our longer-term aspiration of being at
the lower end of this range.
The combination of higher rental income and lower operational
costs, together with full-year contributions from the completion of
building extensions and developments, resulted in a 30% increase in
Adjusted Earnings Per Share to 5.51 cents. The Company has declared
quarterly dividends totalling 5.00 cents in the period, resulting
in dividend cover of 110.2% and the delivery of a fully covered
dividend for the year.
Underpinning these priorities is our objective to maintain a
strong balance sheet position, encompassing the appropriate
management of our cost of debt, available liquidity and metrics
including LTV and net debt/EBITDA.
The Company continues to benefit from a low average cost of debt
of 1.30%, maintained through fixed and capped rates, no
refinancings until Q4 2025 and EUR172.5 million of undrawn
facilities in its RCF. In addition, there remains significant
headroom to LTV ratio and interest cover ratio (ICR) covenants in
the Company's debt agreements.
In response to the elevated LTV ratio reported in our Interim
Results announcement in May, we outlined a disposal programme aimed
at generating proceeds of at least EUR150 million over 12-18
months. The recycled capital would be used to lower debt levels,
fund opportunities within the existing portfolio and maintain our
investment grade credit rating.
We announced the first sale in this disposal programme in
August, comprising a modern warehouse building in Hammersbach, near
Frankfurt in Germany, for c.EUR65 million, which was broadly in
line with book value. However, at 46.4% the LTV ratio remains
higher than we would like, with the beneficial impact of the
disposal being offset by a decline in the portfolio valuation,
development capital expenditure and working capital movements.
Post period end, we also announced the disposal of a second
asset in Germany, at Bochum, for c.EUR47 million and an asset in
Sweden, at Malmö, for c.EUR28 million. These brought the cumulative
total gross sale proceeds from the disposals to c.EUR139 million,
decreasing the pro forma LTV ratio to 44.0% and showing further
progress against our target. We aim to lower the LTV ratio towards
our preferred percentage range in the low 40s over 6 to 12 months
through our ongoing programme of disposals.
In the medium term, the Company expects to refinance the RCF and
the bond ahead of their respective maturities in October 2025 and
June 2026. Our expectation is for the refinanced debt facilities to
be lower than the current amount, albeit at a higher rate to
reflect a likely higher interest rate environment.
Valuation performance
The sharp increase in interest rates and higher cost of capital
has led to a rapid adjustment in asset values over the past 12-18
months and continues to affect investor sentiment and transaction
volumes across the European logistics sector. However, strong
underlying structural drivers, supportive market fundamentals and
rebased asset pricing are attracting investors back to the sector,
with investment activity and asset values showing signs of
stabilisation.
The Company's portfolio valuation declines have reflected these
market trends, with an increase in property yields first
manifesting in the second half of FY22, a greater impact seen in
the first half of FY23, followed by a more modest adjustment at the
latest valuation date at the end of September 2023.
The property portfolio was valued by the Company's independent
valuer, CBRE, at EUR1,561.9 million as at 30 September 2023
compared with EUR1,765.6 million at 30 September 2022. The
valuation declined by 14.5% on a like-for-like basis during the
period, driven by the outward yield shift across the portfolio
partly offset by asset management gains and rental growth. This
included a decline of 0.3% in the second half as signs of
stabilisation emerged. As at 30 September 2023, the portfolio net
initial yield was 4.4% (30 September 2022: 3.8%), with the
equivalent yield at 4.9% (30 September 2022: 3.9%).
In contrast to the weaker investment markets, the continued
strength of occupier markets is reflected in like-for-like rental
growth of 4.5% (7.8% including the Barcelona and Strykow
extensions) and ERV growth of 6.5% over the year, continuing the
positive momentum seen in the prior year.
As at 30 September 2023, the portfolio's ERV (which is the rent
the valuer estimates the portfolio should generate if all buildings
were leased at current market levels) was EUR84.5 million (30
September 2022: EUR81.2 million). As a result, the portfolio
reversion has increased to EUR13.4 million or 17.6% (30 September
2022: EUR7.1 million or 9.5%), and the reversionary yield has
increased to 5.3% from 4.2% on 30 September 2022.
Portfolio strategy and composition
Our portfolio strategy is based on a long-term investment
approach and the goal to generate income-orientated returns with
the ability to capture capital growth over time. We seek to deliver
this strategy through combining a disciplined approach to capital
allocation and proactive asset management and customer engagement,
with enhancing ESG performance central to all our activities.
Our portfolio composition is based on the following
characteristics:
-- diversified by:
- geography, but with the objective of each country having the
appropriate critical mass to enable advantages of scale to be
captured;
- building size, but with a focus on larger-scale warehouses
that facilitate operational efficiencies and where existing and
potential supply is limited; and
- customer and business sector, but with a focus on large, multi-national organisations;
-- displaying an appropriate balance between:
- stabilised, income producing assets; and
- exposure to opportunities to create value through asset
management and development activities;
-- highly efficient:
- let on long leases to strong companies; and
- incorporating in-built, inflation-linked rent escalators;
-- with market-leading ESG credentials:
- reducing the environmental impact of our own and our customers' operations;
- making a meaningful difference to people and communities across our geographies; and
- seeking green lease clauses, which commit customers to using
buildings sustainably, along with an obligation to share resource
usage data.
At the year end, the portfolio comprised 23 high-quality
warehouse assets, diversified by location, building size and
customer sector, plus one building under construction and one plot
of land. The assets are modern, with 89% of the portfolio built in
the past 10 years, located across Belgium, Germany, Italy, the
Netherlands, Poland, Spain and Sweden, and are relatively large,
with 65% of the portfolio in excess of 50,000 sqm (the average size
being 66,000 sqm).
To deliver an attractive level of return with an appropriate
level of risk, our portfolio combines core, stabilised assets with
a managed exposure to development and land. The exposure to
development and value-add activities is managed dynamically to be
aligned with investment and occupational market conditions. With
the external environment becoming more challenging over the past 12
months, we have sought to reduce portfolio exposure to speculative
development risk and to focus on capturing income growth and value
from the existing stabilised portfolio.
The stabilised assets provide the portfolio's core income,
comprise the majority of the portfolio and reflect the relatively
low-risk positioning of the Company.
Exposure to development activity provides the potential for
capturing higher returns with the forward funding of pre-let
developments representing the lower end of the risk spectrum and
the funding of speculative developments the higher end. Typically,
but not in all cases, rental guarantees will be agreed with our
developer-partners to provide protection from potential void
periods following the completion of the building. Speculative
development offers the opportunity to capture higher market rental
levels than appraised levels or the additional rental growth that
may have occurred through the construction phase of the
development.
Asset type (as a % of portfolio FY22
value) FY23
=================================== ======= =======
Stabilised assets 99% 93%
----------------------------------- ------- -------
Pre-let forward funding 0% 5%
Speculative forward funding 1% 2%
Development assets 1% 7%
=================================== ======= =======
Total 100% 100%
----------------------------------- ------- -------
The stabilised assets combine to form a highly efficient
portfolio, reinforced by four distinct characteristics.
Specifically, the assets are let:
i) On long leases
At the period end, the portfolio Weighted Average Unexpired
Lease Term to expiry was 9.6 years (FY22: 9.3 years) and the
Weighted Average Unexpired Lease Term to the first break was 7.9
years (FY22: 8.0 years).
Lease duration (as a % of passing FY22
rent) FY23
===================================== ======= =======
0 - 5 years 24% 29%
5 - 10 years 35% 38%
>10 years 41% 33%
===================================== ======= =======
Total 100% 100%
------------------------------------- ------- -------
ii) To a high-quality customer base
Across the portfolio, the Company has 35 customers operating in
a range of business sectors. Many of the Company's customers are
multi-billion Euro businesses, including some of the world's
best-known companies, underpinning the security of the portfolio's
rental income.
Customer (as a % of passing FY22
rent) FY23
=============================== ======= =======
Mango 14% 11%
Amazon 9% 9%
Puma 8% 8%
Lidl 8% 7%
Wayfair 8% 8%
Action Logistics 6% 6%
Rhenus 6% 6%
Cummins 5% 5%
Clipper 4% -
OVS 3% 3%
Other 29% 37%
=============================== ======= =======
Total 100% 100%
------------------------------- ------- -------
iii) With annual rental uplifts
The majority of the Company's leases contain indexation
provisions offering significant inflation protection and regular
uplifts in income. Rental uplifts are either linked to local
inflation measures or fixed at an agreed rate, with the increases
usually taking place annually.
Indexation (as a % of passing FY22
rent) FY23
================================= ======= =======
CPI uncapped 52% 54%
CPI - capped/other 29% 26%
Fixed 16% 17%
None 3% 3%
================================= ======= =======
Total 100% 100%
--------------------------------- ------- -------
iv) With structurally low vacancies
The EPRA vacancy at the period end was 5.5% (FY22: 0.3%). This
increase was the result of the completion of two speculative
forward fundings at Rosersberg (Sweden) and Settimo Torinese
(Italy) that remain unlet (but covered by rental guarantees), and
the take-back of 22,213 sqm at Strykow. This was partially offset
by lettings at Dormagen (Germany) and half of the development in
Settimo Torinese (Italy).
Strong ESG credentials
Our customers require the ESG performance of the buildings they
occupy to be aligned with their own ESG commitments and targets.
The ESG credentials of our buildings play an important role in
attracting and retaining high-quality occupiers to the portfolio
and also enable our customers to meet the expectations of their
stakeholders. We have a clear ESG strategy focused on working
collaboratively with our customers to jointly deliver enhanced
building performance including carbon reduction, wellbeing and
biodiversity.
The ESG performance of our buildings and alignment with our net
zero carbon pathway are key considerations in determining the
future value and liquidity of our assets. The Company holds a four
Green Star rating from GRESB and EPRA Gold for its Sustainability
Best Practices Recommendations submission.
ESG credentials (as a % of FY22
passing rent) FY23
================================ ======= =======
EPC rating & green building
certification 35% 28%
EPC rating 45% 52%
Green building certification 6% 5%
Unrated 14% 15%
================================ ======= =======
Total 100% 100%
-------------------------------- ------- -------
A proactive approach to asset management
A fundamental part of how we deliver our portfolio strategy is
our proactive approach to asset management. This is focused on
extracting income growth and value uplifts from the opportunities
embedded within the existing portfolio.
Our asset management operations are led by an experienced
in-house team, giving us scope to take a direct and active role in
the strategic asset management of the portfolio and strengthen
relationships with our customers. The in-house team works closely
and collaboratively with our locally based partners and also draws
on the specialist skills within the wider Tritax Group, such as
supply chain, ESG and power expertise, to help formulate our future
asset management plans.
We undertake a thorough bottom-up review of all our assets on a
biannual basis. This enables us to determine the value-maximising
strategy for each property and to review expected returns. In
conjunction with this, a top-down assessment is undertaken to
ensure the portfolio is optimally positioned to capture
efficiencies and to benefit from the positive structural tailwinds
that continue to drive the Continental European logistics
sector.
This process informs our asset recycling strategy by
highlighting those assets where, for example, we have completed our
asset management plans and maximised value or where forecast ESG
performance is not aligned with our overall portfolio objectives.
It also identifies markets where we expect performance to be less
strong or where we have a sub-scale position and gaining sufficient
scale in an appropriate timescale will be challenging. Such assets
will be identified for disposal, enabling us to recycle the capital
into higher returning opportunities or reduce balance sheet
leverage.
Delivering our portfolio objectives
We set ourselves four key portfolio objectives for the year:
1. Capture income growth opportunities embedded in the existing portfolio.
2. Complete ongoing development projects and de-risk rental
guarantees by securing new customers for unlet space.
3. Commence a disposal programme to maintain our balance sheet
strength, and recycle proceeds into reducing debt levels and
funding existing opportunities within the portfolio.
4. Progress agreements with our customers and secure necessary
permits to enable the installation of roof-mounted PV panels on
selected assets.
We have made good progress over the period on all these
objectives.
Objective 1: Capture income growth
We have successfully completed several asset management
initiatives during the period, including:
Asset management
Asset, location initiative Detail
==================== =================== ==========================================================
Barcelona, Extension Completion of a 109,083 sqm extension in November
Spain 2022, which has increased annualised rental income
by EUR2.3 million.
Strykow, Poland Extension Commencement of a new extension for our customer
and lease Arvato, together with an 11-year re-gear of its
re-gear existing lease. The extension was completed at
a yield on cost of 7.2%, increasing the annualised
rental income by EUR0.5 million upon completion.
Dormagen, Letting Completion of a new 10-year lease to GXO at a
Germany rent 17.8% ahead of the underwritten rental guarantee,
converting the rental guarantee into a lease
and increasing the annualised rental income by
an additional EUR0.5 million.
Settimo Torinese, Letting Letting of unit one of the 28,287 sqm speculatively
Italy developed asset, with rent in line with ERV and
consistent with the development funding underwrite.
The six-year green lease to an Italian logistics
specialist includes a further six-year extension
option and includes annually reviewed inflation-linked
uplifts.
Bochum, Germany Letting Letting of unit three at the four-unit prime
asset to a German specialist catering equipment
company, with a seven-year lease 35% above the
current passing rent.
==================== =================== ==========================================================
Objective 2: Complete development projects and de-risk rental
guarantees
We made good progress with the development programme during the
period, completing six forward-funded developments, totalling
224,763 sqm and producing EUR14.6 million per annum in rental
income (EUR11.2 million leased to customers and EUR3.4 million
subject to rental guarantees).
Portfolio
Asset, location activity Detail
==================== ================= ==========================================================
Roosendaal, Development The second and third units (Phase 1B and 2) totalling
the Netherlands completion 65,276 sqm of this forward funded development
(pre-let) pre-let to Lidl were completed in December 2022
and February 2023 respectively. The units generate
annualised rental income of EUR3.2 million.
Rosersberg Development Completed the speculative forward funding development
I, Sweden completion of 13,181 sqm in January 2023, producing annualised
(speculative) rental income of EUR1.1 million through a rental
guarantee, which expires in February 2024. We
are in discussion with potential tenants at rents
above the levels of the rental guarantees.
Dormagen, Development Completed speculative forward funding of 36,434
Germany completion sqm in March 2023, with a 10-year lease signed
(speculative) with GXO in early May, 17.8% ahead of the underwritten
rental guarantee.
Settimo Torinese, Development Practical completion reached in June 2023 of
Italy completion this speculative forward funding of 28,287 sqm,
(speculative) with half the space leased to an Italian logistics
specialist in August 2023. The total scheme has
an ERV of EUR1.3 million.
Bönen, Development Practical completion reached in June 2023 of
Germany completion this forward funded development of 63,753 sqm,
(pre-let) pre-let to Rhenus at an annualised rent of EUR4.3
million.
Rosersberg Development Practical completion reached in July 2023 of
II, Sweden completion this 17,832 sqm speculative forward funding,
(speculative) producing annualised rental income of EUR1.6
million through a rental guarantee, which expires
in August 2024.
Oberhausen, Construction Construction commenced on this two-unit, 23,243
Germany commenced sqm speculative forward funding in July 2023,
(speculative) which has the potential to produce annualised
rental income of EUR2.0 million when fully let.
Practical completion is targeted for Q3 2024
and we are targeting a DGNB Platinum certification.
==================== ================= ==========================================================
The Company owns two further land plots with potential for
building extensions at Wunstorf, Germany, where the existing
building can be extended by 10,000 sqm, and at Geiselwind, Germany,
where capacity exists for a 42,000 sqm extension.
Objective 3: Commence disposal programme and recycle
proceeds
In the Interim Results announcement in May we outlined our
intention to undertake asset disposals of at least EUR150 million
over the following 12-18-month period to reduce the Company's debt
levels and to fund existing opportunities from within the
portfolio. Further to this, and in line with our bi-annual
portfolio review process, in August we announced the disposal of an
asset in Hammersbach (Germany) for c.EUR65 million. This reflected
a net initial yield of 4.45%, broadly in line with the book
valuation of the property, and represented a good first step in our
disposal programme.
Post period end, we announced the sale of a second asset, in
Bochum (Germany), for c.EUR47 million, reflecting a net initial
yield of 4.88%. We also announced the sale of an asset in Malmö for
c.EUR28 million. The sale of the three assets generated gross sale
proceeds of c.EUR139 million, with further sales expected during
2024.
Objective 4: Increase the solar PV generating capacity of the
portfolio
During the year, we continued to progress initiatives to
increase the generation of renewable energy by the installation of
roof-mounted solar panels on our assets. We increased the solar PV
generating capacity of our portfolio to 10.3 MW (FY22: 7.5 MW),
with rooftop solar arrays now installed on eight of our assets.
In addition, we have made applications to commence schemes on
three assets in Germany and are in negotiations with the customers
to agree new Purchasing Power Agreements (PPAs) for those projects.
These assets have been chosen due to their large roof areas, long
unexpired lease terms, sufficient roof load-bearing capacity and
positive, ongoing discussions with the respective customers. The
forecast installation of these projects is Q3 2024 and would add a
further c.9 MW to our portfolio's generating capacity, taking the
total level to over 19 MW.
The intention is to maintain a rolling programme of feasibility
studies to support a phased delivery of installations, in
collaboration with our customers. Our aspiration is to install two
to three solar schemes each year as we look to enhance the
portfolio and support customers with their energy requirements and
ESG ambitions.
Evolving our ESG strategy
At the heart of our asset management approach is our commitment
to an ambitious ESG strategy. This comprises targets across four
areas, comprising sustainable buildings; climate and carbon; nature
and wellbeing; and social value. These are aimed at driving social,
environmental and economic value for our customers, partners,
investors and the wider society.
In 2020 we set a range of ESG targets for the period 2020-2023.
One of our key priorities for 2022 was to establish a clear
baseline from which to launch our new updated ESG targets. These
targets reflect our four principal ambitions for the ESG
performance of the Company, which are summarised as:
1. Our ESG strategy and performance criteria to fundamentally
underpin the investment philosophy of the Company.
2. Our portfolio and our assets to be net zero carbon.
3. Our portfolio to have a positive impact on our climate and the natural world.
4. The social value which our portfolio delivers to make a
meaningful difference to people and communities across our
geographies.
Most notable within these targets is an enhanced commitment to
achieve net zero carbon (as defined by the UK Green Building
Council) across all aspects of our business by 2040, rather than
our previously stated 2050 target. These targets will be reviewed
annually against our KPIs and updated as required.
Theme Target KPI FY23 progress
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
Sustainable The Company did
buildings * 100% of all asset due diligence uses Tritax ESG due * % utilisation of enhanced ESG due diligence framework not purchase
diligence framework any buildings
during the
financial
year. We
commenced the
development
of the
Oberhausen
asset, for
which we are
targeting a DGNB
Platinum
certification.
In
addition, the
Manager revised
its due
diligence
processes
to ensure ESG
factors,
including
climate risks,
are
systematically
considered
pre-acquisition.
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
The Company
* Produce and implement low-carbon baseline development * Production and % utilisation of low-carbon engaged a
specification on all new projects specification third-party
consultant to
measure the
* % circularity certified materials embodied carbon
associated
with its
* % projects undertaking a whole-life performance forward-funded
analysis developments
in Rosersberg
(Sweden) and
Oberhausen
(Germany).
The reduction to
a GRESB score
of 84/100 (FY22:
88/100) was
due to an
increase in
energy
consumption. The
Company is
seeking to
mitigate this
through
its renewable
energy and
customer
engagement
programme.
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
Climate The Company
and carbon * Produce and disclose updated net zero carbon pathways * Annual review of pathway and emissions finalised and
disclosed its
updated net
o Scope 1 and scope * % carbon risk incorporated into each asset management zero targets and
2 - 2025 plan is integrating
o Scope 3 (construction) emissions'
- 2030 reduction across
o Scope 3 (remainder * 1.5degC Paris decarbonisation pathway alignment the portfolio.
of material emissions) We are
- 2040 continuously
* Science-Based Targets initiative (SBTi) alignment (or reviewing
equivalent) changes in
market best
practice,
including
evolutions in
the
SBTi building
sector guidance.
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
The Company
* Integrate physical climate risk mitigation across * % climate risk incorporated into each asset updated its
asset lifecycle management plan portfolio-wide
physical climate
risk assessment,
* Portfolio TCFD alignment and conducted a
vulnerability
assessment on
assets exposed
to natural
hazards.
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
Nature Baseline data
and * Year-on-year annual increase in biodiversity for * % increase in biodiversity against 2022 baseline collection
wellbeing standing assets methodology
agreed.
Implemented
biodiversity
improvement
measures on
several assets
including in
Belgium and
Poland.
New
developments:
continued
enhancement of
ESG development
specification,
including
integration
of biodiversity
measures.
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
Assessed all
* Year-on-year increased provision of wellbeing * % increase in provision against 2022 baseline buildings
enhancements to developments and standing assets currently
without a green
building
certification
against the
BREEAM In-Use
certification
scheme,
including
the Health &
Wellbeing
criteria.
Increasing
customer
engagement,
primarily
through site
visits.
New electric
vehicle (EV)
charging
stations
installed
at three assets.
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
Social The Manager is
value * Publish community investment structure * Set-up and operation of community investment developing
structure a community
investment
* Further integrate ESG criteria into supply chain structure
procurement processes, both for upstream and * % utilisation of due diligence framework for to oversee the
downstream suppliers social value
workstream.
The Manager
undertook a
review
of the property
management
agreement, with
key focus
on ESG services.
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
The Company
* Continue support for the Company's main charity * Level of financial and non-financial contributions donated
GBP25,000
to The Mission
to Seafarers
- continuing the
Company's
three-year
partnership with
the charity.
-------------- ------------------------------------------------------------------ ------------------------------------------------------------ -----------------
Financial Review
FY23 progress summary
What we said we would do
A year ago, we highlighted three key financial objectives:
1. cover the dividend;
2. reduce the Adjusted EPRA Cost Ratio; and
3. manage leverage and maintain a robust balance sheet.
What we achieved
The dividend is 110.2% covered for the financial year, an
increase from 84.8% in FY22. This was the result of higher income,
driven by development completions, asset management and indexation,
together with lower costs, primarily from a reduction in management
fees.
The Adjusted EPRA Cost Ratio has reduced to 24.2% for FY23 from
29.5% in FY22. The ratio improved through the year, with an
Adjusted EPRA Cost Ratio of 22.8% in the six months to September
2023. Our aim is to remain in our target range of 20-25%.
Despite a solid start to our programme of disposals, the LTV
ratio has increased to 46.4% as at 30 September 2023 and remains
higher than we would like at this point of the cycle. The increase
was a result of valuation declines, ongoing development expenditure
and movements in working capital, offsetting the sale proceeds.
Post period-end, we have made further good progress with our
disposal programme, which has generated gross proceeds of c.EUR139m
to date including the disposals of Bochum for c.EUR47 million and
Malmö for c.EUR28 million. Taking account of the Bochum and Malmö
disposals, the pro forma LTV ratio is 44.0%. Further disposals have
been identified and we remain confident of achieving our target LTV
percentage of low 40s over the next 6 to 12 months.
What to expect next
We will look to maintain a covered dividend and the Adjusted
EPRA Cost Ratio within the 20-25% range.
We will seek additional disposals to reduce debt and deliver a
lower LTV ratio, showing a trajectory towards our preferred level.
In the medium term, we expect to refinance the RCF and the bond
ahead of their respective maturities in October 2025 and June
2026.
Portfolio valuation
The portfolio was independently valued by CBRE as at 30
September 2023, in accordance with the RICS Valuation - Global
Standards. The portfolio's total value at the year end was
EUR1,561.9 million (30 September 2022: EUR1,765.6 million),
reflecting a like-for-like valuation decrease of 14.5%, including a
decline of 0.3% in the second half. The Valuation NEY increased by
100 bps over the past 12 months and 10 bps over the past six
months, with this outward yield shift only partially offset by
like-for-like ERV growth of 6.5% over the year.
Financial results
Income
Rental income for the year was EUR68.1 million (FY22: EUR57.9
million), up 17.6%. The growth was primarily the result of
acquisitions during 2022, rent indexations and our asset management
initiatives, including the Mango extension in Barcelona. On a
12-month like-for-like basis, total annualised rental income was
4.5% higher (or 7.8% higher when including the Barcelona and
Strykow extensions).
As at 30 September 2023, the annualised rental income was
EUR76.3 million (FY22: EUR74.3 million), including EUR3.4 million
annualised rental guarantees. With the recent completion of most of
our developments, we expect the share of rental guarantees as a
percentage of total income to decrease materially in 2024, with
most of these rental guarantees converted into IFRS income as
customers take occupation of available warehouse space and leases
commence.
Costs
The Company's operating and administrative costs were EUR16.4
million (FY22: EUR18.2 million), which primarily comprised:
-- the Management Fee payable to the Manager of EUR5.5 million (FY22: EUR7.9 million);
-- the Company's running costs, including accounting, tax and audit; and
-- the Directors' fees.
The EPRA Cost Ratio for the financial year (inclusive of vacancy
cost) was 27.4% (FY22: 41.3%). The Adjusted EPRA Cost Ratio was
24.2% (FY22: 29.5%), including rental guarantees received.
The lower cost ratio was primarily the result of the change in
the Investment Management Agreement last year, that lowered the fee
payable by the Company to the Manager. This was implemented on 6
October 2022, and backdated to be effective from 1 August 2022.
Investment Management Agreement fees
Effective 1 August 2022 Previously
NAV Value Fee NAV value Fee
=================== ======== ================== ========
<EUR1 billion 1.00% <EUR0.5 billion 1.30%
>EUR0.5 billion
>EUR1 billion 0.75% <=EUR2 billion 1.15%
>EUR2 billion 1.00%
=================== ======== ================== ========
The total cost of debt (net of income earned on interest rate
derivatives) for the year was EUR10.1 million (FY22: EUR8.7
million), reflecting an attractive average cost of debt of 1.30%
(FY22: 1.22%). This is the result of all debt facilities during the
year being fixed or hedged, with no refinancing maturities before
Q4 2025.
Post period end, we renewed some of our interest rate caps
expiring in October 2023. We bought a EUR40 million portion with a
two-year maturity co-terminus with the remaining term of the RCF
and a EUR40 million portion to match our short-term RCF requirement
pending the full execution of the disposal programme. Reflecting
current financing conditions, the weighted average strike price of
these caps is 2.72% (previously 0.65%). Looking ahead to FY24, we
expect the total cost of debt to be in the range of 1.25% and
1.50%, subject to drawdowns on the RCF.
The Group made a consolidated loss before tax for the period of
EUR243.0 million (FY22: gain of EUR76.6 million), primarily due to
the decrease in the portfolio valuation, as outlined above.
The income taxation charge for the year was 2.5% (FY22: 2.3%).
The 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 owns the property 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 Per Share
Basic Earnings Per Share for the year was negative 27.68 cents
(FY22: 7.28 cents), with the decrease versus the prior year
reflecting the adverse valuation movement through FY23. EPRA EPS,
which excludes valuation movements, was 5.66 cents (FY22: 2.58
cents). Adjusted Earnings, which include rental guarantees, were
EUR44.5 million (FY22: EUR34.2 million), resulting in Adjusted EPS
of 5.51 cents (FY22: 4.24 cents). More information about the
calculation of basic, EPRA and Adjusted EPS can be found in Note 12
to the Financial Statements.
Net assets
The IFRS NAV per share at the year-end was EUR0.99 (30 September
2022: EUR1.32). The EPRA NTA per share at the year-end was EUR1.02
(30 September 2022: EUR1.38). The Board recognises the 42% discount
to EPRA NTA, as at 30 September 2023. The valuation of investment
property is the main driver of the EPRA NTA, and was determined by
CBRE as independent valuer. The Board is satisfied that the
valuation exercise was performed in accordance with RICS Valuation
- Global Standards. As such, the Board has full confidence in the
level of EPRA NTA disclosed in the financial statements at the
reporting date. More information on EPRA's net asset valuation
metrics can be found in the EPRA Performance Measures section.
Debt financing
At the year end, the Company had total debt drawn of EUR777
million. This resulted in an LTV ratio of 46.4% (30 September 2022:
35.2%), with EUR172.5 million available undrawn debt. Taking into
account the recently announced disposals at Bochum and Malmö, the
pro forma LTV ratio decreases to 44.0%. Further disposals are
planned during 2024 to reduce the LTV towards our preferred level
of low 40s.
The Company's financing is insulated from any near-term
increases in interest rates, with no maturities before Q4 2025 and
100% of its total drawn debt either fixed or benefiting from
interest rate caps limiting the rise in Euribor to 2.72%.
Post period-end activity
On 29 November 2023, the Company agreed a lease at its two-unit
asset in Settimo Torinese, Italy.
On 30 November 2023, the Company exchanged on the sale of its
asset at Bochum, Germany, and the redevelopment site at Malmo,
Sweden.
Related party transactions
Transactions with related parties included the Management Fee
paid to the Manager and the Directors' fees.
Alternative Investment Fund Manager (AIFM)
The Company is an Alternative Investment Fund within the meaning
of the AIFMD and has appointed the Manager as its AIFM. The Manager
is authorised and regulated by the Financial Conduct Authority as a
full scope AIFM.
Dividends
The Company has declared the following dividends in respect of
the year:
Amount per
Declared share In respect of Paid/to be paid
================== ============= ============================= ===================
1 October to 31 December
9 February 2023 1.25 cents 2022 14 March 2023
18 May 2023 1.25 cents 1 January to 31 March 2023 23 June 2023
8 August 2023 1.25 cents 1 April to 30 June 2023 8 September 2023
1 July to 30 September
5 December 2023 1.25 cents 2023 12 January 2024
================== ============= ============================= ===================
The total dividend for the year was 5.00 cents per share or
EUR40.3 million (FY22: EUR40.3 million) and was 110.2% covered by
Adjusted Earnings (FY22: 84.8%).
Key Performance Indicators
Set out below are the key performance indicators we use to track
our strategic progress.
KPI and definition Our progress in FY23 Performance
(for the year ended
30 September)
================================================================================================ =================================================================================================== ======================
1. Dividend per share Our policy is to pay an attractive and progressive dividend, with a minimum payout of 85% 2023: 5.00 cents
Dividends paid to shareholders and declared in relation to the period. of Adjusted Earnings. per share
While keeping the Dividend per share unchanged from the prior year, the earnings growth from 2022: 5.00 cents
the business supported the dividend being fully covered for the year. per share
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
2. Total Return (TR) The return calculated from the dividends paid has been more than offset by the decline in 2023: (22.5)%
valuation, which was driven by inflation and the resulting impacts on interest rates.
Total Return measures the change in the EPRA Net Tangible Assets (EPRA NTA) over the period 2022: 6.0%
plus dividends paid.
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
3. Basic Net Asset Value Inflation and the resulting impacts on interest rates have been the key drivers of this 2023: EUR795.6
Net asset value in IFRS GAAP. valuation million (EUR0.99
movement, which could not be fully offset by strong market rental growth and indexation. per share)
2022: EUR1,065.8
million (EUR1.32
per share)
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
4. Adjusted earnings Adjusted Earnings increased by 30.0% in the year, reflecting the full-year impact on rental EUR44.5 million
EPRA earnings, adjusted to include licence fees and rental guarantees receivable on forward income from acquisitions in the prior year and a 10% decrease in administrative expenses. (5.51 cents per
funded development assets and for other earnings not supported by cash flows. share)
EUR34.2 million
(4.24 cents per
share)
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
5. Loan to value ratio (LTV) The lower portfolio valuation, ongoing capital expenditure and working capital movements largely 2023: 46.4%
offset the benefit of the sales proceeds from the disposal programme. The Company remains
comfortably below the LTV ratio covenant of 65%. Including the disposals of Bochum and Malmö
;,
the pro forma LTV is 44.0%.
The proportion of our gross asset value that is funded by net borrowings (excluding cash). 2022: 35.2%
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
6. Weighted average unexpired lease term (WAULT) The Company has maintained a WAULT of greater than five years across the portfolio, in 2023: 7.9 years
The portfolio average of the remaining number of years, weighted by annual passing rents, accordance (9.6 years to
until the sooner of the lease expiry or the customer's break option. with typical lease lengths in Continental Europe. The WAULT to expiry is 9.6 years. term.)
2022: 8.0 years
(9.3 years to term)
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
7. Dividend cover The 30.0% growth in Adjusted Earnings, combined with maintaining a dividend per share of 5.00 2023: 110.2%
cents, drove an increase in dividend cover to 110.2%.
Adjusted Earnings as a proportion of the dividend declared for the financial period. 2022: 84.8%
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
8. Interest cover The Company remains comfortably above its interest cover ratio covenant of 1.5x. 2023: 4.8x
The ratio of consolidated earnings before interest and taxation to consolidated net finance 2022: 4.2x
costs in respect of any measurement period.
The definition, and calculation method, of interest cover ratio has changed during the year
aligning banking covenants and reporting. See Notes to EPRA and Other Key Performance
Indicators
for calculation. Comparatives for FY22 and FY21 were 6.6x and 6.3x using the previous
definition.
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
9. Like-for-like rental growth Solid rental growth in the period was driven by our asset management initiatives and indexation. 2023: 4.5%
Like-for-like rental growth (excluding extensions; including extensions: 7.8%) compares the 2022: 3.6%
growth of the rental income of the portfolio that has been consistently in operation and not
under development during the two full preceding periods.
The definition, and calculation method, of like-for-like growth has changed during the year,
moving to be in line with the industry standard definition, which excludes extensions. The
comparative for FY22 using the previous basis was 4.0%.
------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ----------------------
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.
KPI and definition Comments Performance
(for the year
ended 30
September)
===================================================================================================== ================================================================================================ ==================
1. EPRA Net Reinstatement Value (EPRA NRV) A key measure to highlight the value of net assets on a long-term basis. The metric reflects 2023: EUR903.0
Basic NAV adjusted for mark-to-market valuation of derivatives, deferred tax and transaction what would be needed to recreate the current portfolio of the company. million
costs (real estate transfer tax and purchaser's costs). 2 022:
EUR1,194.7
million
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
2. EPRA Net Tangible Assets (EPRA NTA) Assumes that entities buy and sell assets, thereby crystallising certain levels of 2023: EUR820.6
Basic NAV adjusted to remove the fair values of financial instruments and deferred taxes. unavoidable million
This excludes transaction costs. deferred tax.
2022:
EUR1,111.0
million
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
3. EPRA Net Disposal Value (EPRA NDV) Represents the shareholders' value under a disposal scenario, where deferred tax, financial 2023: EUR795.6
Equivalent to IFRS NAV, as this includes the fair values of financial instruments and deferred instruments and certain other adjustments are calculated to the full extent of their million
taxes. liability, 2022:
net of any resulting tax. EUR1,065.8
million
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
4. EPRA Earnings A key measure of the Company's underlying results and an indication of the extent to which 2023: EUR45.7
Earnings from operational activities. current dividend payments are supported by earnings. million
2022: EUR20.9
million
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
5. EPRA Net Initial Yield (NIY) This measure should make it easier for investors to judge for themselves how the valuations 2023: 4.2%
of portfolios compare.
Annualised rental income based on the cash rents passing at the balance sheet date, less non-reco 2022: 3.6%
verable
property operating expenses, divided by the market value of the property, increased with (estimat
ed)
purchasers' costs.
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
6. EPRA 'Topped-up' NIY This measure should make it easier for investors to judge for themselves how the valuations 2 023: 4.3%
of portfolios compare.
This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free 2022: 3.7%
periods (or other unexpired lease incentives such as discounted rent periods and step rents).
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
7. EPRA Vacancy Rate A 'pure' (%) measure of investment property space that is vacant, based on ERV. 2 023: 5.5%
Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio. 2022: 0.3%
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
8. EPRA Cost Ratio A key measure to enable meaningful measurement of the changes in a company's operating costs. 2 033: 27.4 %
Administrative and operating costs (including and excluding costs of direct vacancy) divided 2022: 4 1.3 %
by gross rental income.
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
9. Adjusted EPRA Cost Ratio This ratio includes licence fee income and rental guarantees and excludes exceptional items 2023: 24.2%
of a capital nature.
EPRA Cost Ratio adjusted for non-operational items. 2022: 29.5%
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
10. EPRA Loan to value (LTV) ratio The EPRA LTV introduces a consistent and comparable metric for the sector, with the aim to 2023: 46.3%
assess the gearing of the shareholder equity within a real estate company.
The proportion of our gross asset value funded by net borrowings (incorporating net payables). 2022: 35.6%
----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ ------------------
Principal risks and uncertainties
At least twice a year, the Board undertakes a formal risk
review, with the assistance of the Audit & Risk Committee, to
assess the effectiveness of our risk management and internal
control systems. During the period the Audit & Risk Committee
instructed BDO to perform a risk review. In conjunction with the
Manager, the engagement was to enhance the Company's approach to
risk management. The outcome of the review has led to an improved
risk register, enhanced mitigations and a pathway to more adequate
risk based decisions in the future.
The Audit & Risk Committee considers that general
macroeconomic uncertainty results in greater volatility on certain
risks, namely the value of the portfolio, finance costs and
customer default risk.
The Company's principal risks are summarised below:
Property risks
1. Customers may default.
2. The value of the property portfolio may experience adverse
change.
3. Portfolio growth may slow.
4. Lack of diversification may amplify local risks.
5. Development activities may not be profitable.
6. The product may not appeal to customers or investors.
7. Getting the market cycle wrong, leading to wrong investment,
divestment, and/or leasing decisions.
8. Inappropriate portfolio construct.
Operational risks
9. The performance of the Manager and/or third-party suppliers
may not be adequate.
10. Insurance at appropriate premiums may not be available.
Financial risks
11. Debt funding at appropriate levels may not be available.
12. The Euro may fluctuate against other currencies of countries
in which the Company operates.
13. The leverage level and target range may not be
appropriate.
14. Debt covenants may be breached.
Taxation risks
15. A change in the Company's investment trust status may cause
loss.
16. Changes to local tax legislation in countries in which the
Company is invested may cause loss.
Political and market risks
17. General political and/or economic uncertainty may disrupt
the Company's ability to execute its strategy.
18. Rising energy prices may impact the overall economy and our
customers.
ESG risks
19. Physical and transition risks from climate change.
Other risks
20. The Company's data may be exposed to cyber-attack.
21. Lack of corporate governance and/or lack of compliance with
laws and regulations.
Group Statement of Comprehensive Income
For the year ended 30 September 2023
Year ended Year ended
30 September 30 September
2023 2022
Note EURm EURm
--------------------------------------------------- ------- ---------------- ----------------
Rental income 6 68.07 57.89
Service charge income 6 10.79 10.14
Other income 6 1.03 0.70
--------------------------------------------------- ------- ---------------- ----------------
Gross property income 6 79.89 68.73
Direct property costs 7 (14.15) (16.53)
--------------------------------------------------- ------- ---------------- ----------------
Net property income 65.74 52.20
Fair value (loss)/gain on investment properties 14 (285.43) 49.94
Loss on disposal of investment property (2.73) -
Administrative and other expenses 8 (16.35) (18.18)
--------------------------------------------------- ------- ---------------- ----------------
Operating (loss)/profit (238.77) 83.96
Finance income 10 3.49 -
Finance expense 10 (5.21) (12.07)
Effect of foreign exchange differences 8 (0.29) 0.20
Changes in fair value and realised loss on
interest rate derivatives 21 (2.19) 4.55
--------------------------------------------------- ------- ---------------- ----------------
(Loss)/profit before taxation (242.97) 76.64
Taxation 11 19.61 (17.87)
--------------------------------------------------- ------- ---------------- ----------------
(Loss)/profit for the year (223.36) 58.77
--------------------------------------------------- ------- ---------------- ----------------
Other comprehensive income
Foreign currency translation differences -
foreign operations (6.43) (6.30)
--------------------------------------------------- ------- ---------------- ----------------
Total comprehensive (loss)/income for the
year attributable to the Shareholders (229.79) 52.47
--------------------------------------------------- ------- ---------------- ----------------
Earnings Per Share ("EPS") (expressed in cents
per share)
EPS - basic and diluted 12 (27.68) 7.28
--------------------------------------------------- ------- ---------------- ----------------
Group Statement of Financial Position
As at 30 September 2023
30 September 30 September
2023 2022
Note EURm EURm
------------------------------------------------ ------- --------------- ---------------
Non-current assets
Investment properties 14 1,512.55 1,765.60
Derivative financial instruments 21 1.05 4.43
Trade and other receivables 16 1.76 1.17
Deferred tax assets 11 1.23 2.11
------------------------------------------------ ------- --------------- ---------------
Total non-current assets 1,516.59 1,773.31
------------------------------------------------ ------- --------------- ---------------
Current assets
Asset held for sale 15 49.30 --
Trade and other receivables 16 33.63 31.43
Cash and cash equivalents 17 52.31 90.18
------------------------------------------------ ------- --------------- ---------------
Total current assets 135.24 121.61
------------------------------------------------ ------- --------------- ---------------
Total assets 1,651.83 1,894.92
------------------------------------------------ ------- --------------- ---------------
Current liabilities
Trade and other payables 18 (30.21) (38.80)
Income tax liability (1.32) (0.60)
------------------------------------------------ ------- --------------- ---------------
Total current liabilities (31.53) (39.40)
------------------------------------------------ ------- --------------- ---------------
Non-current liabilities
Trade and other payables 18 (1.71) (1.29)
Loan notes and borrowings 19 (770.10) (701.07)
Deferred tax liabilities 11 (27.22) (51.74)
Other liabilities 20 (23.31) (33.62)
Customer deposit 24 (2.34) (2.05)
------------------------------------------------ ------- --------------- ---------------
Total non-current liabilities (824.68) (789.77)
------------------------------------------------ ------- --------------- ---------------
Total liabilities (856.21) (829.17)
------------------------------------------------ ------- --------------- ---------------
Net assets 795.62 1,065.75
------------------------------------------------ ------- --------------- ---------------
Equity
Share capital 25 8.07 8.07
Share premium reserve 597.58 597.58
Translation reserve (12.67) (6.24)
Retained earnings 202.64 466.34
------------------------------------------------ ------- --------------- ---------------
Total equity 795.62 1,065.75
------------------------------------------------ ------- --------------- ---------------
Net Asset Value ("NAV") per share (expressed
in Euro per share)
Basic NAV 26 0.99 1.32
EPRA NTA 26 1.02 1.38
------------------------------------------------ ------- --------------- ---------------
The financial statements were approved by the Board of Directors
on 4 December 2023 and signed on its behalf by:
Robert Orr
Independent Chairman
Company registration number: 11367705
Group Statement of Changes in Equity
For the year ended 30 September 2023
Share Share Translation Retained
capital premium reserve earnings Total
Note EURm EURm EURm EURm EURm
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
At 1 October 2022 8.07 597.58 (6.24) 466.34 1,065.75
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Net loss for the year - - - (223.36) (223.36)
Other comprehensive loss - - (6.43) - (6.43)
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Total comprehensive loss - - (6.43) (223.36) (229.79)
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Contributions and distributions:
New share capital subscribed 25 - - - - -
Associated share issue costs - - - - -
Dividends paid 13 - - - (40.34) (40.34)
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Total contributions and distributions - - - (40.34) (40.34)
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
At 30 September 2023 8.07 597.58 (12.67) 202.64 795.62
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Share Share Translation Retained
capital premium reserve earnings Total
Note EURm EURm EURm EURm EURm
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
At 1 October 2021 8.07 597.46 0.06 447.91 1,053.50
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Net profit for the year - - - 58.77 58.77
Other comprehensive income - - (6.30) - (6.30)
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Total comprehensive income - - (6.30) 58.77 52.47
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Contributions and distributions:
New share capital subscribed 25 - 0.14 - - 0.14
Associated share issue costs - (0.02) - - (0.02)
Dividends paid 13 - - - (40.34) (40.34)
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Total contributions and distributions - 0.12 - (40.34) (40.22)
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
At 30 September 2022 8.07 597.58 (6.24) 466.34 1,065.75
---------------------------------------- ------- ----------- ----------- -------------- ------------ -----------
Group Cash Flow Statement
For the year ended 30 September 2023
For the For the
year ended year ended
30 September 30 September
2023 2022
Note EURm EURm
------------------------------------------------------ ------- ---------------- ----------------
Cash flows from operating activities
Loss/profit for the year (223.36) 58.77
Result on disposal of investment property 2.73 -
Changes in fair value of investment properties 14 285.43 (49.94)
Changes in value of interest rate derivatives 21 3.91 (4.38)
Tax (credit)/expense 11 (19.61) 17.87
Net finance expense 10 1.72 12.07
Spreading of customer lease incentives 6 (1.67) (2.45)
Amortisation of capital contribution and lease
commissions 6 0.95 0.54
(Increase)/decrease in trade and other receivables (3.54) (24.30)
Increase/(decrease) in trade and other payables (8.10) 15.06
Increase/(decrease) in other liabilities (7.78) 8.37
------------------------------------------------------ ------- ---------------- ----------------
Cash generated from operations 30.68 31.61
Tax paid (3.31) (0.92)
------------------------------------------------------ ------- ---------------- ----------------
Net cash flow generated from operating activities 27.37 30.69
------------------------------------------------------ ------- ---------------- ----------------
Investing activities
Purchase of investment properties 14 (25.89) (288.41)
Disposal of investment properties 59.06 -
Disposal of assets held for sale - -
Improvements to investment properties and
development expenditure 14 (127.13) (144.79)
Rental guarantees and developer licence fees
received 9.20 8.74
------------------------------------------------------ ------- ---------------- ----------------
Net cash flow used in investing activities (84.76) (424.46)
------------------------------------------------------ ------- ---------------- ----------------
Financing activities
Net proceeds from issue of Ordinary Share
capital - 0.12
Loans received 19 126.00 206.48
Loans repaid 19 (59.50) -
Premium paid for interest rate cap 21 (0.53) -
Finance expense paid (5.23) (8.96)
Dividends paid to equity holders 13 (40.34) (40.34)
------------------------------------------------------ ------- ---------------- ----------------
Net cash flow generated from financing activities 20.40 157.30
------------------------------------------------------ ------- ---------------- ----------------
Net movement in cash and cash equivalents
for the year (36.99) (236.47)
Cash and cash equivalents at start of the
year 17 90.18 329.73
Unrealised foreign exchange gains (0.88) (3.08)
------------------------------------------------------ ------- ---------------- ----------------
Cash and cash equivalents at end of the year 52.31 90.18
------------------------------------------------------ ------- ---------------- ----------------
Notes to the Consolidated Accounts
1. Corporate information
The consolidated financial statements of the Group for the year
ended 30 September 2023 comprise the results of Tritax EuroBox plc
("the Company") and its subsidiaries (together "the Group") and
were approved by the Board for issue on 4 December 2023. 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
2023 or 2022 but is derived from those accounts. Statutory accounts
for period ended 30 September 2022 have been delivered to the
registrar of companies, and those for the year ended 30 September
2023 will be delivered in due course. The auditor has reported on
those accounts; their reports were (i) unqualified (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
Accounting policies
2. Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards
(UK-adopted IFRS) and the applicable legal requirements of the
Companies Act 2006. The Group's financial statements have been
prepared on a historical cost basis, as modified for the Group's
investment properties and interest rate derivatives, which have
been measured at fair value through the Group profit or loss.
The Group has chosen to adopt EPRA (European Public Real Estate
Association - www.epra.com/finance/financial-reporting/guidelines)
best practice guidelines for calculating key metrics such as net
tangible assets ("NTA") and Earnings Per Share. The Group has
decided to adopt EPRA NTA as its primary EPRA NAV measure. These
are disclosed in notes 12 and 26.
2.1. Going concern
The Directors have prepared cash flow forecasts for the Group
for a period of at least 12 months from the date of approval of the
consolidated financial statements.
The assumptions underpinning these forecast cash flows and
covenant compliance forecasts were sensitised, to explore the
Group's resilience to the potential impact of its significant
risks, or a combination of those risks, as detailed in the
scenarios below.
1) The combined impact of four key customers defaulting without
replacement, combined with a 12-month delay in letting properties
under development.
2) Yield expansion resulting in further property valuation falls
and the impact on debt covenants.
3) Worsening macroeconomic environment resulting in increasing
debt costs and inability to execute disposals.
The above sensitivities indicated that the Group would be able
to operate within its existing facilities and maintain covenant
compliance in a severe but plausible downside.
The Group's cash balance at 30 September 2023 was EUR52.31
million. It also had undrawn amounts under its unsecured Revolving
Credit Facility ("RCF") of a further EUR172.50 million at the date
of approval of these financial statements. Of the Group's total
loans and facilities (RCF, Green Bond and USPP), EUR250 million
mature in 2025, EUR500 million in 2026, EUR100 million in 2029,
EUR50 million in 2032 and EUR50 million in 2034. The loan includes
financial covenants for loan to value ("LTV"), interest cover ratio
("ICR") and gearing. These covenants have been complied with
throughout the year and up to the date of approval of these
financial statements.
The LTV covenant is measured quarterly based on the property
valuation as used in the consolidated financial statements. Based
on the most recent valuation the Group retained headroom against a
covenant limit, reporting 46.4% against the limit of 65%. LTV would
breach 65% if the valuation of the Group's investment properties
were to decrease by 28.6%, based on the latest valuation.
The gearing covenant is measured quarterly based on consolidated
total net borrowings to consolidated Shareholders' funds. Based on
the most recent reporting the Group retained headroom against the
covenant limit, reporting 91% against the limit of 150%. Gearing
would breach 150% if the valuation of the Group's investment
properties were to decrease by 20%, based on the latest valuation.
The Directors are confident that there's sufficient headroom from
the potential downside scenarios identified in the reverse stress
tests.
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 (see Notes to
the EPRA and Other Key Performance Indicators).
Based on the most recent reporting, the Group was not in breach
of covenant minimum, reporting 4.81 times which was above the 1.5
times minimum.
As a result of the above considerations the Directors forecast
that covenant compliance will continue for at least the next 12
months.
Consequently, the Directors are confident that the Group and the
Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
3. Significant accounting judgements, estimates and
assumptions
The preparation of the Group's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability
affected in future periods.
3.1. Judgements
In the process of applying the Group's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the consolidated
financial statements:
Business combinations
The Group acquires subsidiaries that own investment properties.
At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the
acquisition of an asset. Under the Definition of a Business
(Amendments to IFRS 3 "Business Combinations"), to be considered a
business an acquired set of activities and assets must include, at
a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs. The
Group applies the optional "concentration test" in determining
whether an acquisition is a business combination; where
substantially all of the fair value of gross assets acquired is
concentrated in a single asset (or a group of similar assets), the
assets acquired would not represent a business. Therefore, the
Group accounts for an acquisition as a business combination where
an integrated set of activities is acquired in addition to the
property.
Where such acquisitions are not judged to be the acquisition of
a business, they are not treated as business combinations. Rather,
the cost to acquire the corporate entity is allocated between the
identifiable assets and liabilities of the entity based upon their
relative fair values at the acquisition date. Accordingly, no
goodwill or additional deferred tax relating to pre-acquisition
property valuation gains arises.
In the current and prior periods all acquisitions were accounted
for as asset acquisitions as in all acquisitions substantially all
of the fair value of the gross assets acquired was concentrated in
asingle asset.
Segment reporting
The Directors are of the opinion that the Group is engaged in a
single segment business, being the investment in and development of
European Big Box assets. The Directors consider that these
properties have similar economic characteristics and as a result
these individual properties have been reported as a single
operating segment.
3.2. Estimates
Fair valuation of investment property
The fair value of investment property is determined, by an
independent property valuation expert, to be the estimated amount
for which a property should exchange on the date of the valuation
in an arm's length transaction. Properties have been valued on an
individual basis. The valuation expert uses recognised valuation
techniques, applying the principles of both IAS 40 and IFRS 13.
The valuations have been prepared in accordance with the Royal
Institution of Chartered Surveyors ("RICS") Valuation - Global
Standards January 2022 (the "Red Book"). Factors reflected include
current market conditions, annual rentals, lease lengths and
location. The significant methods and assumptions used by valuers
in estimating the fair value of investment property are set out in
note 14.
4. Summary of significant accounting policies
4.1. Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company up
to 30 September 2023.
Control is achieved when the Company is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee. For acquisitions not considered business combinations,
the cost of acquisition is allocated to the assets and liabilities
acquired based upon their relative fair values, and no goodwill or
deferred tax is recognised. Non-controlling interests are accounted
for in section 4.5.
For each of the subsidiaries within the Group with
non-controlling interests (see note 4 of the Company financial
statements), the Group has issued put options to the
non-controlling interest. The Group has adopted the anticipated
acquisition method under which the underlying interests of the
non-controlling interest are presented in the Group Statement of
Financial Position and the Group Statement of Comprehensive Income
as if they are already acquired by the Group.
The day-to-day operations of Fondo Minerva Eurobox Italy are
managed by Savills IM ("Savills") in accordance with the
requirements of the Italian REIF regime. The Company has control to
replace Savills with another operator and therefore considers the
investment to be a subsidiary under IFRS 10.
The results of subsidiaries where control is acquired or
disposed of during the year are included in the Group profit or
loss from the effective date of acquisition or up to the effective
date of disposal, as appropriate. Where necessary, adjustments are
made to the financial statements of subsidiaries to bring the
accounting policies used in line with those of the Group.
All intercompany transactions and balances between Group
companies are eliminated on consolidation. These consolidated
financial statements include the financial statements of the
Company and the subsidiary companies as listed in note 4 of the
Company accounts.
4.2. Investment property and investment property under
construction
Investment property comprises completed property that is owned
or held under a lease to earn rentals or for capital appreciation,
or both, and property under development where the Group intends to
retain ownership on completion.
Investment property is recognised when it is probable that the
future economic benefits that are associated with the investment
property will flow to the entity and the cost of the investment
property can be measured reliably. The cost of investment property
includes potential payments under put options granted to
non-controlling interests of subsidiaries which own investment
property. Rent guarantees and top-ups paid by a vendor to the Group
to compensate the Group for vacant space or rent-free periods are
treated as part of the cost of the property acquired and offset the
initial purchase consideration. Such receipts are included in the
Group's Adjusted EPS in note 12. Transaction costs include transfer
taxes, professional fees for legal and other services and other
costs incurred in order to bring the property to the condition
necessary for it to be capable of operating. Subsequent to initial
recognition, investment property is stated at fair value. Gains or
losses arising from changes in the fair values are included in the
Group profit or loss.
Investment properties under construction are financed by the
Group where the Group enters into contracts for both pre-let
properties and speculative development under a funding agreement.
All such contracts specify a fixed amount of consideration. The
speculative development risk is mitigated by having rental
guarantees in place to mitigate this risk. Investment properties
under construction are initially recognised at cost (including any
associated costs), which reflect the Group's investment in the
assets. Development payments made in line with funding agreements
are recognised in additions. Subsequently, the assets are
remeasured to fair value at each reporting date. The fair value of
investment properties under construction is estimated as the fair
value of the completed asset less any costs still payable in order
to complete.
Additions to properties include costs of a capital nature only.
Expenditure is classified as capital when it results in
identifiable future economic benefits, that can be measured
reliably, which are expected to accrue to the Group. All other
property expenditure is expensed in the Group profit or loss as
incurred.
The corresponding entry upon recognising lease incentives or
fixed/minimum rental uplifts is made to investment property. For
further details please see accounting policy note 4.8.1.
Investment properties cease to be recognised when they have been
disposed of or withdrawn permanently from use and no future
economic benefit is expected from disposal. The difference between
the net disposal proceeds and the carrying amount of the asset at
the point of disposal is recognised in the Group profit or loss in
the year of retirement or disposal.
4.3. Assets held for sale
A non-current asset or disposal group is classified as held for
sale when the carrying amount will be recovered principally through
sale rather than through continuing use. Four criteria must all be
satisfied to trigger disclosure as an asset held for sale. These
are; the asset is available for immediate sale, it is management's
intent to dispose of the asset, there are active efforts to promote
its disposal, and sale is highly probable within one year. Such
assets or disposal groups are measured at the lower of the carrying
amount and fair value less costs to sell and once classified as
held for sale, the asset is no longer amortised or depreciated.
Investment property that is classified as held for sale is held at
fair value.
4.4. Financial instruments
Fair value hierarchy
Level 1: Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
reassessing categorisation at the end of each reporting period.
4.4.1. Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired. The Group's accounting policy for each category
is as follows:
Derivative financial instruments
Derivative financial instruments refer to interest rate caps
purchased for hedging purposes which are initially recognised at
fair value plus costs of acquisition and are subsequently measured
at fair value. The Group does not apply hedge accounting and hence
the gain or loss at each fair value remeasurement date is
recognised in the profit or loss.
Amortised cost
The Group's financial assets measured at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
Consolidated Statement of Financial Position.
These assets arise principally from the provision of goods and
services to customers (e.g. trade receivables), but also
incorporate other types of financial assets where the objective is
to hold these assets in order to collect contractual cash flows
which are solely payments of principal and interest. They are
initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue and are
subsequently carried at amortised cost being the effective interest
rate method, less provision for impairment.
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss disclosed in the
Group profit or loss. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Cash and cash equivalents include cash in hand, deposits held at
call with banks and other short-term highly liquid investments with
original maturities of three months or less.
4.4.2. Financial liabilities
The Group classifies its financial liabilities as amortised
cost.
The Group's accounting policy for each type of financial
liability is as follows:
Loans and borrowings
Loans and bank borrowings are initially recognised at fair value
net of any transaction costs directly attributable to the issue of
the instrument. Such interest-bearing liabilities are subsequently
measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the year to
repayment is at a constant rate on the balance of the liability
carried in the Group Statement of Financial Position. For the
purposes of each financial liability, interest expense includes
initial transaction costs and any premium payable on redemption, as
well as any interest or coupon payment while the liability is
outstanding.
Extensions of bank borrowings under accordion options in the
original facility agreement are treated as changes in estimated
cash flows under the original financial liability.
Other non-derivative financial liabilities
Non-derivative financial liabilities are recognised initially at
the date that the Group becomes a party to the contractual
provisions of the instrument and are measured initially at fair
value less initial direct costs and subsequently measured at
amortised cost. The Group derecognises a financial liability when
its contractual obligations are discharged or cancelled or
expire.
4.5. Put option liabilities
Liabilities for put options held by non-controlling interests
are initially and subsequently recognised at the present value of
the exercise price of the option. This is taken to be the
non-controlling interest's proportionate share of the current fair
value of investment property, the carrying amount of other net
assets plus the present value of anticipated payments to be made by
the Group under dividend guarantees to the non-controlling
interest.
Changes in the carrying amount of the put liability are
recognised within finance expenses in the Group Statement of
Comprehensive Income.
4.6. Forward funded pre-let investments
The Group enters into forward funding development agreements.
For pre-let investments, the Group will enter into a forward
funding agreement with a developer and simultaneously enter into an
agreement for lease with a prospective customer willing to occupy
the building once complete.
During the period between initial investment in a forward funded
agreement and the rent commencement date under the lease, the Group
usually receives licence fee income. Usually this is payable by the
developer to the Group throughout this period and typically
reflects the approximate level of rental income that is expected to
be payable under the lease, as and when practical completion is
reached. IAS 40.20 states that investment property should be
recognised initially at cost, being the consideration paid to
acquire the asset; therefore, such licence fees are deducted from
the cost of the investment and are shown as a receivable.
4.7. Dividends payable to Shareholders
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the Shareholders
at an Annual General Meeting.
4.8. Property income
4.8.1. Rental income
Rental income arising from operating leases on investment
property is accounted for on a straight-line basis over the lease
term and is included in gross rental income in the Group profit or
loss. The lease term is the non-cancellable period of the lease.
Customer break clauses are assumed to be exercised unless it is
reasonably certain at inception of the lease that the break will
not be exercised.
Customer lease incentives are recognised as an adjustment of
rental revenue on a straight-line basis over the term of the lease.
Included in the straight-line basis are the effects of future fixed
or minimum uplifts. Any contingent rental uplifts are excluded
until the amounts are known. Initial direct costs incurred in
negotiating and arranging an operating lease are recognised as an
expense over the lease term on the same basis as the lease income.
Rental income is invoiced, either monthly or quarterly in advance,
and for all rental income that relates to a future period, this is
deferred and appears within current liabilities on the Group
Statement of Financial Position.
Amounts received from customers to terminate leases or to
compensate for dilapidations are recognised in the Group Statement
of Comprehensive Income when the right to receive them arises.
Similarly, amounts paid to customers to terminate leases are
recognised in the Group Statement of Comprehensive Income.
When the Group enters into a forward funded transaction, the
future customer signs an agreement for lease. No rental income is
recognised under the agreement for lease; once practical completion
has taken place and the formal lease is signed, rental income
commences to be recognised in the Group profit or loss.
4.8.2. Service charges and other income
Income from providing services is recognised in the accounting
period in which the services are rendered. Revenue from services is
recognised based on the actual service provided to the end of the
reporting period as a proportion of the total services to be
provided and recognised over time. The Group generally acts as the
principal in service charge transactions as it directly controls
the delivery of the services at the point they are provided to the
customer. Where the Group acts as a principal, service charge
income is presented gross within revenue and service charge expense
presented gross within costs.
4.9. Finance income
Finance income is recognised as interest accrues on cash
balances and short-term deposits held by the Group. Finance income
is also recognised in respect of interest rate derivatives.
Interest charged to a customer on overdue rental income is also
recognised within finance income.
4.10. Finance costs
Finance costs consist of interest and other costs that the Group
incurs in connection with bank and other borrowings, and the
holding of deposits in Euro bank accounts. All interest costs are
expensed to the Group profit or loss in the period in which they
occur on an effective interest basis and all loan issue costs paid
are offset against amounts drawn on the facilities and are
amortised over the term of the facilities.
The Group has elected not to capitalise interest on investment
properties under development.
4.11. Taxation
The Company is approved by HMRC as an investment trust under
Section 1158 of the Corporation Tax Act 2010.
In respect of each accounting period for which the Company
continues to be approved by HMRC as an investment trust, the
Company will be exempt from UK taxation on its capital gains. The
Company is, however, liable to UK corporation tax on its
income.
The Company should in practice be exempt from UK corporation tax
on dividend income received, provided that such dividends (whether
from UK or non-UK companies) fall within one of the "exempt
classes" in Part 9A of the CTA 2009. The Company is also able to
elect to take advantage of modified UK tax treatment in respect of
its "qualifying interest income" for an accounting period referred
to as the "streaming" regime. Under regulations made pursuant to
the Finance Act 2009, the Company may designate as an "interest
distribution" all or part of the amount it distributes to
Shareholders as dividends, to the extent that it has "qualifying
interest income" for the accounting period. If the Company
designates any dividend it pays in this manner, it is able to
deduct such interest distributions from its income in calculating
its taxable profit for the relevant accounting period.
The Company's status as an approved investment trust does not
impact the taxation of its subsidiaries or the Group's liability to
tax in the other countries in which the Group operates.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from "profit before tax" as reported
in the Consolidated Statement of Comprehensive Income because of
items of income or expense that are taxable or deductible in other
years and items that are never taxable or deductible. The Group's
current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting year.
Where corporation tax arises in subsidiaries, these amounts are
charged to the Consolidated Statement of Comprehensive Income. The
current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the date of the balance
sheet in the countries where the Group operates.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition (other than in a business combination)
of assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit. In addition, deferred tax
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill.
Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the year in which the liability
is settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the
reporting year. The rates used in the calculation of deferred tax
are in accordance with legislation where the Group operates.
The carrying values of the Group's investment properties are
assumed to be realised by sale at the end of use. The capital gains
tax rate applied is that which would apply on a direct sale of the
property recorded in the Consolidated Balance Sheet regardless of
whether the Group would structure the sale via the disposal of the
subsidiary holding the asset, to which a different tax rate may
apply. The deferred tax is then calculated based on the respective
temporary differences and tax consequences arising from recovery
through sale.
4.12. Provision
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, that can be reliably measured, and it is probable that
an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects risks specific to
the liability.
4.13. Foreign currency translation
The presentation currency of the Company is Euro. Each entity in
the Group determines its own functional currency and items included
in the financial statements of each entity are measured using that
functional currency. All entities in the Group, with the exception
of Sweden, have Euro as the functional currency.
The assets and liabilities of Sweden are translated to the
Group's presentational currency, Euro, at foreign exchange rates
ruling at the balance sheet date. The revenues and expenses of
foreign operations are translated at an average rate for the year
where this rate approximates to the foreign exchange rates ruling
at the dates of the transactions. Exchange differences arising from
this translation of foreign operations are reported as an item of
other comprehensive income and accumulated in the translation
reserve.
Non-monetary assets and liabilities carried at fair value that
are denominated in foreign currencies are translated at the rates
prevailing on the date that the fair value was determined. Gains
and losses arising on exchange are included in the profit or loss
for the year, except for exchange differences arising on
non-monetary assets and liabilities where the changes in fair value
are recognised directly to equity, and any exchange component of
that gain and loss is also recognised directly to equity.
5. Standards in issue
5.1. Standards in issue and effective from 1 October 2022
There was no material effect from the adoption of amendments to
IFRS effective in the year. They have no impact to the Group
significantly as they are either not relevant to the Group's
activities or require accounting which is consistent with the
Group's current accounting policies.
5.2. New standards issued but not yet effective
There are new standards and amendments to standards and
interpretations which have been issued that are effective in future
accounting periods, and which the Group has decided not to adopt
early. None of these are expected to have a material impact on the
consolidated financial statements of the Group.
Certain new accounting standards and amendments are effective
for annual periods beginning after 1 January 2023, and have not
been applied in preparing these financial statements:
-- IFRS 17 'Insurance contracts';
-- Amendments to IAS 1, 'Presentation of Financial Statements',
on classification of liabilities;
-- Amendments to IAS 8, 'Accounting policies, Changes in
Accounting Estimates and Errors', definition of accounting
estimates;
-- Amendments to IAS 1, 'Presentation of Financial Statements',
disclosure of accounting policies;
-- Amendments to IAS 12 - 'Deferred taxes related to assets and
liabilities arising from a single transaction'; and
-- Amendments to IFRS 17 Insurance Contracts: Initial
application of IFRS 17 and IFRS 9 - Comparative Information'.
The amendments that are not yet effective are not expected to
have a material impact on the Group in the current or future
reporting periods and on the foreseeable future transactions.
6. Gross property income
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------------- ---------------- ----------------
Rental income 67.35 55.98
Spreading of customer incentives 1.67 2.45
Amortisation of capital contribution and lease commission (0.95) (0.54)
------------------------------------------------------------- ---------------- ----------------
Gross rental income 68.07 57.89
Service charges recoverable 10.79 10.14
Other income 1.03 0.70
------------------------------------------------------------- ---------------- ----------------
Gross property income 79.89 68.73
------------------------------------------------------------- ---------------- ----------------
The Group derives property income from the following
countries:
Gross property income The
(EURm) Belgium Germany Spain Italy Poland Netherlands Sweden Total
------------------------- ---------- ---------- -------- -------- --------- --------------- --------- --------
30 September 2023 9.00 32.69 10.97 9.85 6.66 7.66 3.06 79.89
------------------------- ---------- ---------- -------- -------- --------- --------------- --------- --------
30 September 2022 7.98 28.34 10.77 8.95 6.18 4.00 2.51 68.73
------------------------- ---------- ---------- -------- -------- --------- --------------- --------- --------
The undiscounted future minimum lease payments under
non-cancellable operating leases receivable by the Group are as
follows:
Between Between Between Between
Less 1 2 3 4 More
than and 2 and 3 and 4 and 5 than
1 year years years years years 5 years Total
EURm EURm EURm EURm EURm EURm EURm
--------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------
30 September 2023 71.41 70.59 64.79 62.51 53.57 284.28 607.15
--------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------
30 September 2022 64.98 63.74 60.27 55.65 53.22 262.64 560.50
--------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------
The Group's investment properties are leased mainly to single
customers, some of which have rental securities attached (bank or
parent guarantees, cash deposit), under the terms of a commercial
property lease. The majority have rent indexation that are linked
to either RPI/CPI or fixed uplifts.
There is one customer (EUR9.73 million) representing more than
10% of rental income during the year (2022: two customers EUR7.75
million and EUR6.29 million). As of 30 September 2023, one customer
represented more than 10% of passing rent (2022: one customer).
7. Direct property costs
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
---------------------------- ---------------- ----------------
Service charge expense 11.60 10.49
Other expenses 2.55 1.74
Lease surrender payment1 - 4.30
---------------------------- ---------------- ----------------
Total property expenses 14.15 16.53
---------------------------- ---------------- ----------------
1 Payment to terminate existing lease.
8. Administrative and other expenses
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------------ ---------------- ----------------
Investment management fees1 9.29 11.86
Directors' remuneration (note 9) 0.35 0.32
Auditor's fees:
Fees payable for the audit of the Company's accounts 0.53 0.51
Fees payable for the review of the Company's interim
accounts 0.07 0.07
Fees payable for the audit of the Company's subsidiaries 0.35 0.12
------------------------------------------------------------ ---------------- ----------------
Total Auditor's fee 0.95 0.70
Corporate administration fees 1.89 1.80
Regulatory fees 0.11 0.12
Legal and professional fees 2.28 2.03
Marketing and promotional fees 0.93 0.70
Other administrative costs 0.55 0.65
------------------------------------------------------------ ---------------- ----------------
Total administrative and other expenses 16.35 18.18
------------------------------------------------------------ ---------------- ----------------
1 Investment management fees include fees payable to Tritax
Management LLP for EUR5.47 million (30 September 2022: EUR7.88
million (see note 27)). The remaining EUR3.82 million (2022:
EUR3.98 million) was paid to asset managers and property
managers.
The effect of foreign exchange differences for the year ended 30
September 2023 consists of an unrealised foreign exchange currency
loss of EUR0.29 million (2022: unrealised foreign exchange currency
gain of EUR0.28 million and offset by realised foreign exchange
currency loss of EUR0.08 million).
9. Directors' remuneration
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------- ---------------- ----------------
Directors' fees 0.22 0.21
Employer's National Insurance 0.13 0.11
--------------------------------- ---------------- ----------------
Total Directors' remuneration 0.35 0.32
--------------------------------- ---------------- ----------------
A summary of the Directors' emoluments, including the
disclosures required by the Companies Act 2006, is set out in the
Directors' Remuneration Report (page 97).
Personnel
During the current and prior periods the Company did not have
any personnel, besides the Directors of the Company.
10. Finance income and expense
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------------------- ---------------- ----------------
Interest income on interest rate derivative 3.41 -
Interest received on bank deposits 0.08 -
--------------------------------------------------------- ---------------- ----------------
Total finance income 3.49 -
--------------------------------------------------------- ---------------- ----------------
Interest payable on loans and bank borrowings and
other liabilities 11.91 6.76
Commitment fees payable on bank borrowings 0.99 1.13
Present value movement on remeasurement of put option
and repayment (10.89) 0.90
Bank fees 0.25 0.80
One-off cost of bank loans - 0.05
Amortisation of loan arrangement fees and derivative
financial instrument 2.95 2.43
--------------------------------------------------------- ---------------- ----------------
Total finance expense 5.21 12.07
--------------------------------------------------------- ---------------- ----------------
The total interest payable on financial liabilities carried at
amortised cost comprises interest and commitment fees payable on
bank borrowings of EUR12.90 million (30 September 2022: EUR7.89
million), of which EURnil was capitalised in both periods, and
amortisation of loan arrangement fees of EUR2.55 million (30
September 2022: EUR2.43 million), of which EURnil million (30
September 2022: EUR2.40 million) of the loan agreement fees was
capitalised into the loan in the year (see note 19).
The present value movement on remeasurement of put option
relates to the minority interest in the Group's German properties.
This reflects the minority interest's share of the respective
financial result for the financial year, for further details see
note 20 and accounting policy 4.5.
11. Taxation
a) Tax charge in the Group Statement of Comprehensive Income
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------- ---------------- ----------------
Current taxation:
UK taxation - -
Overseas taxation - current year (1.71) (1.19)
Overseas taxation - prior year adjustment - -
Deferred taxation:
UK taxation - -
Overseas taxation 21.32 (16.68)
--------------------------------------------- ---------------- ----------------
Total tax credit/(charge) 19.61 (17.87)
--------------------------------------------- ---------------- ----------------
The UK corporation tax charge of EURnil reflects the Company's
intention to declare sufficient "qualifying interest distributions"
to fully offset its "qualifying interest income" in the year in
accordance with its status as an Investment Trust Company
("ITC").
In the 3 March 2021 Budget it was announced that, from 1 April
2023, the UK main rate of corporation tax would be increased to
25%. Given that the Company's tax charge is EURnil, due to its
status as an ITC, there is no anticipated consequential effect on
the future tax charge.
b) Factors affecting the tax charge for the year
The tax assessed for the year is lower than the standard rate of
corporation tax in the UK. The differences are explained below:
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
----------------------------------------------------------- ---------------- ----------------
(Loss)/profit before taxation (242.97) 76.64
----------------------------------------------------------- ---------------- ----------------
Theoretical tax at UK corporation tax rate of blended
22% (30 September 2022: 19%) 53.45 (14.56)
Losses and other differences where no deferred taxes
have been recognised (33.68) (2.52)
Impact of different tax rates on foreign jurisdictions (3.28) (2.50)
Expenses not deductible for tax purposes 1.19 (0.99)
Impact of UK interest distributions from the Investment
Trust 1.93 2.65
Prior year adjustment to current tax - 0.05
----------------------------------------------------------- ---------------- ----------------
Total tax credit/(charge) 19.61 (17.87)
----------------------------------------------------------- ---------------- ----------------
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
---------------------------------------------------- ---------------- ----------------
Deferred tax assets:
Differences between tax and property revaluation 0.71 1.64
Tax losses carried forward 0.52 0.47
Other - -
---------------------------------------------------- ---------------- ----------------
Total 1.23 2.11
---------------------------------------------------- ---------------- ----------------
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
---------------------------------------------------- ---------------- ----------------
Deferred tax liabilities:
Differences between tax and property revaluation 27.22 51.74
Other - -
---------------------------------------------------- ---------------- ----------------
Total 27.22 51.74
---------------------------------------------------- ---------------- ----------------
The amount of unutilised tax losses and tax credits for which no
deferred tax asset is recognised in the profit and loss account was
EUR16.1 million (2022: EUR9.6 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 2023 and 2022, there are no
dilutive or potentially dilutive equity arrangements in
existence.
The calculation of EPS is based on the following:
Weighted
Net profit average
attributable number of
to Ordinary Ordinary Earnings
Shareholders Shares 1 Per Share
For the year ended 30 September 2023 EURm '000 cents
------------------------------------------------------ ---------------- ------------- -------------
Basic EPS (223.36) 806,804 (27.68)
Adjustments to remove:
Deferred tax charge/(credit) (note 11) (21.32)
Changes in fair value of investment properties
and investment property under construction
(note 14) 285.43
Changes in fair value of interest rate derivatives
(note 21) 1.70
Loss on disposal on investment properties 2.73
Loss on disposal of financial derivatives
(note 21) 0.49
------------------------------------------------------ ---------------- ------------- -------------
EPRA EPS 45.67 806,804 5.66
------------------------------------------------------ ---------------- ------------- -------------
Adjustments to (exclude)/include:
Rental income recognised in respect of fixed
uplifts (0.72)
Amortisation of loan arrangement fees 2.55
Unrealised foreign exchange currency loss
(note 8) 0.29
Present value movement on remeasurement of
put option and repayment (note 20) (10.89)
Rental guarantee receipts and developer's
licence fee excluded from property income
- settled via cash2 9.20
Finance income from financial derivatives (1.63)
------------------------------------------------------ ---------------- ------------- -------------
Adjusted EPS 44.47 806,804 5.51
------------------------------------------------------ ---------------- ------------- -------------
Weighted
Net profit average
attributable number of
to Ordinary Ordinary Earnings
Shareholders Shares1 Per Share
For the year ended 30 September 2022 EURm '000 cents
------------------------------------------------------ ---------------- ------------- -------------
Basic EPS 58.77 806,779 7.28
Adjustments to remove:
Deferred tax charge and capital gains tax
on disposal of investment properties (note
11) 16.68
Changes in fair value of investment properties
and investment property under construction
(note 14) (49.94)
Changes in fair value of interest rate derivatives
(note 21) (4.66)
------------------------------------------------------ ---------------- ------------- -------------
EPRA EPS 20.85 806,779 2.58
------------------------------------------------------ ---------------- ------------- -------------
Adjustments to (exclude)/include:
Rental income recognised in respect of fixed
uplifts (1.90)
Amortisation of loan arrangement fees 2.43
Unrealised foreign exchange currency loss (0.26)
Fair value movement on remeasurement of put
option (note 20) 0.05
Rental guarantee receipts and developer's
licence fee excluded from property income
- settled via cash2 8.74
Lease surrender payment3 4.30
------------------------------------------------------ ---------------- ------------- -------------
Adjusted EPS 34.21 806,779 4.24
------------------------------------------------------ ---------------- ------------- -------------
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 Capital investment to terminate an existing lease in
Hammersbach to harness rental growth resulting in longer-term value
to the business - refer to note 7.
Adjusted Earnings is a performance measure used by the Board to
assess the level of the Group's dividend payments. The metric
mainly adjusts EPRA earnings for:
i. Exclusion of non-cash items credited or charged to the Group
Statement of Comprehensive Income, such as fixed rental uplift
adjustments and amortisation of loan arrangement fees;
ii. Inclusion of licence fees which relate to cash received from
developers during development periods, in order to access the
land;
iii. Inclusion of rental guarantee adjustments which relate to
acquired assets with properties which have had an income guarantee
attached to them as part of the acquisition of the asset. The
rental guarantee is released (through a cash movement or contracted
liability settlement) as Adjusted Earnings over the period of the
lease which it is intended to cover or lease break. However, this
release does not go through rental income in the Group Statement of
Comprehensive Income, and as such an adjustment is made to
recognise the receipt;
iv. Exclusion of exceptional items, considered as an expense
under IFRS, which are capital in substance and nature and result in
longer-term value to the business; and
v. Exclusion of the over hedged portion of interest income from
financial derivatives, considered as income under IFRS, as
financing activities are not part of the Group's operations.
13. Dividends paid
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
-------------------------------------------------------- ---------------- ----------------
Final dividend in respect of year ended 30 September
2022 at 1.25 cents per Ordinary Share
(30 September 2021: 1.25 cents) 10.08 10.08
First interim dividend in respect of year ended 30
September 2023 at 1.25 cents per Ordinary Share (30
September 2022: 1.25 cents) 10.09 10.08
Second interim dividend in respect of year ended 30
September 2023 at 1.25 cents per Ordinary Share (30
September 2022: 1.25 cents) 10.08 10.09
Third interim dividend in respect of year ended 30
September 2023 at 1.25 cents per Ordinary Share (30
September 2022: 1.25 cents) 10.09 10.09
-------------------------------------------------------- ---------------- ----------------
Total dividends paid 40.34 40.34
-------------------------------------------------------- ---------------- ----------------
Total dividends paid for the year 3.75 cents 3.75 cents
-------------------------------------------------------- ---------------- ----------------
Total dividends unpaid but declared for the year 1.25 cents 1.25 cents
-------------------------------------------------------- ---------------- ----------------
Total dividends declared for the year 5.00 cents 5.00 cents
-------------------------------------------------------- ---------------- ----------------
On 5 December 2023 the Directors of the Company declared a
fourth interim dividend in respect of the period from 1 July 2023
to 30 September 2023 of 1.25 cents per Ordinary Share, which will
be payable on or around 12 January 2024 to Shareholders on the
register on 15 December 2023.
Out of EUR40.34 million (30 September 2022: EUR40.34 million)
dividends declared for the year, EUR15.09 million (30 September
2022: EUR8.79 million) is designated as interest distribution.
14. Investment properties
The Group's investment property has been valued at fair value by
CBRE 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 prior year's valuation was carried out by Jones Lang
LaSalle. The valuations have been prepared in accordance with the
RICS Valuation - Global Standards January 2022 (the "Red Book") and
incorporate the recommendations of the International Valuation
Standards which are consistent with the principles set out in IFRS
13. In forming its opinion, CBRE makes a series of assumptions,
which are typically market related, such as yields and expected
rental values, and are based on the valuer's professional judgement
and the current tenancy of the properties.
The valuations are the ultimate responsibility of the Directors.
Accordingly, the critical assumptions used in establishing the
independent valuation are reviewed by the Board.
The total valuation fee incurred by the Group in the year
amounts to EUR132,055 (period ended 30 September 2022: EUR124,800).
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 Group acquired land at Oberhausen. The
acquisition was finalised on 5 January 2023, shown in the table
below under investment properties under construction.
Investment
Investment properties Investment
properties under properties
completed construction total
EURm EURm EURm
------------------------------------------------------ -------------- ---------------- --------------
At 1 October 2022 1,543.87 221.73 1,765.60
Acquisition of properties1 1.13 7.05 8.18
Additions to investment properties 2.42 142.42 144.84
Transfer from investment properties under
construction to investment properties 339.87 (339.87) -
Investment property transferred to asset held
for sale (49.30) - (49.30)
Disposal of investment property (65.70) - (65.70)
Licence fees and rental guarantees received (3.21) - (3.21)
Fixed rental uplift and customer lease incentives2 4.64 - 4.64
Amortisation of rental uplift and customer
lease incentives2 (1.49) - (1.49)
Change in fair value during the year3 (271.79) (13.64) (285.43)
Foreign exchange movement during the year (5.58) - (5.58)
------------------------------------------------------ -------------- ---------------- --------------
As at 30 September 2023 1,494.86 17.69 1,512.55
------------------------------------------------------ -------------- ---------------- --------------
Investment
Investment properties Investment
properties under properties
completed construction total
EURm EURm EURm
------------------------------------------------------ -------------- ---------------- --------------
At 1 October 2021 1,257.35 24.03 1,281.38
Acquisition of properties1 168.65 134.52 303.17
Additions to investment properties 1.41 143.38 144.79
Transfer from investment properties to investment
properties under construction (1.30) 1.30 -
Transfer from investment properties under
construction to investment properties 70.17 (70.17) -
Licence fees and rental guarantees received (0.44) (14.31) (14.75)
Fixed rental uplift and customer lease incentives2 5.66 - 5.66
Amortisation of rental uplift and customer
lease incentives2 (1.35) - (1.35)
Change in fair value during the year3 46.87 3.07 49.94
Foreign exchange movement during the year (3.15) (0.09) (3.24)
------------------------------------------------------ -------------- ---------------- --------------
As at 30 September 2022 1,543.87 221.73 1,765.60
------------------------------------------------------ -------------- ---------------- --------------
1 This includes acquisition costs of EUR0.64 million (30
September 2022: EUR13.81 million) and relates to the purchase of
land at Oberhausen.
2 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 2023 was
EUR13.30 million (30 September 2022: EUR10.94 million). The
difference between this and cash receipts changes the carrying
value of the property against which revaluations are measured (also
see note 6).
3 Included in the fair value change in the year were unrealised
gains of EUR6.16 million (30 September 2022: EUR93.08 million) and
unrealised losses of EUR291.59 million (30 September 2022: EUR43.14
million).
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------------------- --------------- ---------------
Investment properties in balance sheet and asset held
for sale (see note 15) 1,561.85 1,765.60
Rental guarantee held in separate receivable 2.90 6.93
--------------------------------------------------------- --------------- ---------------
Total external valuation of investment properties 1,564.75 1,772.53
--------------------------------------------------------- --------------- ---------------
As at 30 September 2023, the Group had EUR22.9 million of
outstanding capital commitments in relation to its forward funded
development assets (30 September 2022: EUR123.7 million):
-- Stryków EUR1.8 million; and
-- Oberhausen EUR21.1 million.
These costs are not provided for in the Statement of Financial
Position. Capital commitments represent costs to bring the asset to
completion under the developer's funding agreements which include
the developer's margin.
Valuation risk
There is risk to the fair value of real estate assets that are
part of the portfolio of the Group, comprising variation in the
yields that the market attributes to the real estate investments
and the market income that may be earned.
Real estate investments can be impacted adversely by external
factors such as the general economic climate, supply and demand
dynamics in the market, climates risks, competition, and increase
in operating costs.
Besides asset-specific characteristics, general market
circumstances affect the value and income from investment
properties such as the cost of regulatory requirements related to
investment properties, interest rate levels and the availability of
financing.
The Manager of the Group has implemented a portfolio strategy
with the aim to mitigate the above stated real estate risk. By
diversifying in regions, risk categories and customers, it is
expected to lower the risk profile of the portfolio.
As of the date of this Annual Report, the only investments of
the Group that have been identified consist of the current
portfolio as specified in the Management Report.
With respect to new investments, management will be targeting
specific investment categories based on the Group's investment
objective and restrictions. Because such investments may be made
over a substantial period of time, the Group faces the risk of
interest rate fluctuations in case of leveraging these investments
and adverse changes in the real estate markets.
Fair value hierarchy
The Group considers that all of its investment properties and
investment properties under construction fall within Level 3 of the
fair value hierarchy as defined by IFRS 13. There have been no
transfers between Level 1 and Level 2 during any of the periods,
nor have there been any transfers between Level 2 and Level 3
during any of the periods.
The valuations have been prepared on the basis of market value
("MV"), which is defined in the RICS Valuation Standards as:
"The estimated amount for which a property should exchange on
the date of valuation between a willing buyer and a willing seller
in an arm's length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without
compulsion."
MV as defined in the RICS Valuation Standards is the equivalent
of fair value under IFRS.
The descriptions and definitions relating to valuation
techniques and key unobservable inputs made in determining fair
values are as follows:
Valuation techniques
Investment properties completed: income approach
The income method (or income approach) quantifies the net
present value of future benefits associated with the ownership of
the asset by totalling the current tenancy of the property,
followed by the demand market rent on lease expiry, capitalised at
an appropriate yield. The methodology is based on a direct
capitalisation model where the lease-based income has been
capitalised with an all-risk yield in perpetuity. The choice of
this methodology represents the likely basis of analysis to be used
by a potential purchaser for this type of property (income
producing).
Investment properties under construction: residual approach or
equivalent
The residual approach or equivalent for properties under
construction takes the expected valuation of the finished property
using the income approach and deducts forecast costs to complete
the development and an allowance for developer's profit.
Unobservable input: estimated rental value ("ERV")
ERV is dependent upon a number of variables in relation to the
Group's property. These include: size, building specification and
location derived from comparable evidence as identified by the
independent valuer. At 30 September 2023, the range was between
EUR33 and EUR104 per square metre, per annum (2022: EUR44 and
EUR94). The Group has not disclosed the weighted average ERV due to
the large dispertion of these due to the different markets that the
properties are located in.
Unobservable input: yield
Yield is dependent on the customer, lease length and the other
variables listed above for ERV, derived from comparable evidence as
identified by the independent valuer. At 30 September 2023, the
weighted average yield for standing assets was 4.43% and the range
was between 3.56% and 5.70% (2022: 3.28% and 4.89%). Implicit in
the yield is the valuer's consideration of climate risks.
Yield and ERV are not necessarily independent variables. It is
possible a change in one assumption may result in an offsetting
change to the other but equally the change in both assumptions may
increase the impact on valuation.
Sensitivities of measurement of significant unobservable
inputs
As set out within significant accounting estimates and
judgements above, the Group's property portfolio valuation is open
to estimation uncertainty and is inherently subjective by nature.
At the balance sheet date, when the property portfolio was valued,
the Group considered the range used below, in the sensitivity
analysis, to be appropriate as at that date. As in a stabilised
logistics market, the ranges used represent reasonable possible
changes in unobservable inputs.
As a result the following sensitivity analysis has been prepared
for investment properties:
-0.25% yield +0.25% yield -5% in ERV +5% in ERV
EURm EURm EURm EURm
------------------------------------------------ --------------- --------------- ------------- -------------
Increase/(decrease) in the fair value
of investment properties as at 30
September 2023 85.45 (76.19) (52.79) 53.08
------------------------------------------------ --------------- --------------- ------------- -------------
Increase/(decrease) in the fair value
of investment properties under construction
and land as at 30 September 2023 5.05 (4.56) (4.83) 4.83
------------------------------------------------ --------------- --------------- ------------- -------------
Increase/(decrease) in the fair value
of investment properties as at 30
September 2022 95.69 (84.74) (31.67) 33.82
------------------------------------------------ --------------- --------------- ------------- -------------
Increase/(decrease) in the fair value
of investment properties under construction
as at 30 September 2022 19.45 (17.48) (14.07) 15.14
------------------------------------------------ --------------- --------------- ------------- -------------
The CBRE valuation includes deductions for transaction costs
that would be incurred by a hypothetical purchaser at the valuation
date. These costs include Real Estate Transfer Tax ("RETT")
equivalent to stamp duty except for properties in Belgium, Poland
and Sweden. In Belgium, Poland and Sweden, the local valuation
practice is to exclude such costs given the prevalence of corporate
rather than asset transactions in these markets.
15. Asset held for sale
30 September 30 September
2023 2022
EURm EURm
---------------------- --------------- ---------------
Asset held for sale 49.30 -
---------------------- --------------- ---------------
Asset held for sale relates to an investment property for which
there was Investment Committee approval to dispose of at the
year-end date, and the intention is to dispose of the asset, which
is highly probable to be disposed of within 12 months. The asset is
expected to be disposed of via a share deal, with the investment in
subsidiary balance detailed as a current asset in the parent
company financial statements.
16. Trade and other receivables
30 September 30 September
2023 2022
Non-current trade and other receivables EURm EURm
------------------------------------------- --------------- ---------------
Cash in public institutions 1.76 1.17
------------------------------------------- --------------- ---------------
The cash in public institutions is a deposit of EUR1.76 million
given by the customer for the property in Barcelona, Spain.
30 September 30 September
2023 2022
Current trade and other receivables EURm EURm
------------------------------------------------------ --------------- ---------------
Trade receivables 1.77 1.34
Prepayments, accrued income and other receivables1 28.89 18.61
VAT receivable2 2.97 11.48
------------------------------------------------------ --------------- ---------------
33.63 31.43
------------------------------------------------------ --------------- ---------------
1 Other receivables includes a fitout cost of EUR6.75 million
receivable from a tenant, and two subsidies totalling EUR11.58
million receivable from KfW, the German development bank, on
recently completed developments (30 September 2022: EURnil).
2 VAT receivable includes VAT on capital expenditure across the
developments and a reclaim on the purchase of the property in Italy
of EUR0.93 million (30 September 2022: EUR1.00 million).
The following table sets out the ageing of trade receivables as
at 30 September 2023:
30 September 30 September
2023 2022
Past due but not impaired EURm EURm
----------------------------- --------------- ---------------
<30 days 1.11 0.92
30-60 days - -
60-90 days 0.15 0.02
90 days+ 0.72 0.40
----------------------------- --------------- ---------------
Total 1.98 1.34
Past due and impaired (0.21) -
----------------------------- --------------- ---------------
Total 1.77 1.34
----------------------------- --------------- ---------------
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 provisions 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.
17. Cash and cash equivalents
30 September 30 September
2023 2022
EURm EURm
----------------------------- --------------- ---------------
Cash and cash equivalents 52.31 90.18
----------------------------- --------------- ---------------
At the year-end there are no balances deemed as cash
equivalents. 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 2023 was EUR9.23 million (30 September
2022: EUR24.40 million).
18. Trade and other payables
30 September 30 September
2023 2022
Non-current trade and other payables EURm EURm
---------------------------------------- --------------- ---------------
Other payables 1.71 1.29
---------------------------------------- --------------- ---------------
30 September 30 September
2023 2022
Current trade and other payables EURm EURm
------------------------------------ --------------- ---------------
Trade and other payables 8.25 7.44
Bank loan interest payable 2.38 2.40
Deferred income 2.54 2.97
Accruals 15.62 25.99
VAT liability 1.42 -
------------------------------------ --------------- ---------------
30.21 38.80
------------------------------------ --------------- ---------------
The carrying value of trade and other payables classified as
financial liabilities measured at amortised cost approximates fair
value.
19. Loan notes and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost. For more information about the Group's
exposure to interest rate and foreign currency risk, see note
22.
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------- --------------- ---------------
Bank borrowings 76.25 9.11
Loan notes 693.85 691.96
------------------------------------------------- --------------- ---------------
Non-current liabilities: loans and borrowings 770.10 701.07
------------------------------------------------- --------------- ---------------
The Group has EUR200 million US private placement debt split
into three tranches: EUR100 million with a coupon of 1.216%
maturing in 2029, EUR50 million with a coupon of 1.449% maturing in
2032, and EUR50 million with a coupon of 1.590% maturing in 2034.
The 0.95% Green Bond matures in 2026.
The Group has a long-term Revolving Credit Facility ("RCF") (see
table below). The loan has a margin of 1.2% to 1.9% above the
higher of zero or Euribor, depending on the drawn level and the
prevailing LTV ratio.
Facility
EURm Maturity date
--------------------- ----------- ----------------
19 October
Banco Santander 58.8 2025
19 October
BNP Paribas 58.8 2025
19 October
Bank of China 58.8 2025
19 October
Bank of America 58.8 2025
19 October
Banco de Sabadell 14.8 2025
--------------------- ----------- ----------------
Total RCF 250.0
--------------------- ----------- ----------------
As at 30 September 2023, 73.7% (2022: 73.7%) of the Group's debt
facilities are fixed term with 26.3% floating term (2022: 26.3%).
The weighted average term to maturity of the Group's total debt
facilities at the year end is 3.5 years (30 September 2022: 4.5
years). The LTV across all drawn debt was 46.4%.
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
2023 2022
Bank borrowings drawn EURm EURm
-------------------------------------------------------------- --------------- ---------------
Bank borrowings at the beginning of the year 9.11 -
Bank borrowings drawn in the year 126.00 11.00
Bank borrowings repaid in the year (59.50) -
Loan issue costs paid (0.01) (0.45)
Non-cash amortisation of loan issue costs 0.65 0.55
Reclass unamortised loan issue costs to/(from) prepayments - (1.99)
-------------------------------------------------------------- --------------- ---------------
Non-current liabilities: borrowings 76.25 9.11
-------------------------------------------------------------- --------------- ---------------
30 September 30 September
2023 2022
Loan notes EURm EURm
----------------------------------------- --------------- ---------------
Green Bond 500.00 500.00
1.216% USPP 2029 100.00 100.00
1.449% USPP 2032 50.00 50.00
1.590% USPP 2034 50.00 50.00
Less: unamortised costs on loan notes (6.15) (8.04)
----------------------------------------- --------------- ---------------
Non-current liabilities: loan notes 693.85 691.96
----------------------------------------- --------------- ---------------
A summary of the drawn and undrawn loans and bank borrowings in
the year is shown below:
30 September 2023
------------------------------------
Total debt
Drawn Undrawn available
EURm EURm EURm
------------------------------------------ --------- ---------- -------------
Repayable between one and two years - - -
Repayable between two and three years 577.50 172.50 750.00
Repayable between three and four years - - -
Repayable between four and five years - - -
Repayable in over five years 200.00 - 200.00
------------------------------------------ --------- ---------- -------------
777.50 172.50 950.00
------------------------------------------ --------- ---------- -------------
30 September 2022
------------------------------------
Total debt
Drawn Undrawn available
EURm EURm EURm
------------------------------------------ --------- ---------- -------------
Repayable between one and two years - - -
Repayable between two and three years - - -
Repayable between three and four years 511.00 239.00 750.00
Repayable between four and five years - - -
Repayable in over five years 200.00 - 200.00
------------------------------------------ --------- ---------- -------------
711.00 239.00 950.00
------------------------------------------ --------- ---------- -------------
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
2023 2023 2022 2022
EURm EURm EURm EURm
-------------------------------------- ---------------- ---------------- ---------------- ----------------
Bank borrowings: RCF 77.50 77.50 11.00 11.00
Loan notes: 0.95% Green Bonds 2026 500.00 440.30 500.00 422.55
1.216% USPP 2029 100.00 91.85 100.00 91.81
1.449% USPP 2032 50.00 44.37 50.00 44.75
1.590% USPP 2034 50.00 43.52 50.00 44.14
-------------------------------------- ---------------- ---------------- ---------------- ----------------
Loan notes and borrowings 777.50 697.54 711.00 614.25
-------------------------------------- ---------------- ---------------- ---------------- ----------------
The fair value of the 0.95% Green Bonds 2026 is determined with
reference to its quoted market price. The fair value of the 1.216%
USPP 2029, 1.449% USPP 2032 and 1.590% USPP 2034 is determined by
an independent third party. The financial liabilities are
considered to be a Level 1 and Level 2 fair value measure. The fair
value of the financial liabilities at Level 1 was EUR440.30 million
(30 September 2022: EUR422.55 million) and Level 2 was EUR179.74
million (2022: EUR180.70 million).
20. Other liabilities
30 September 30 September
2023 2022
EURm EURm
-------------------------------------------------------- --------------- ---------------
Balance at the beginning of the year 33.62 25.19
Addition 3.93 8.38
Repayments (0.97) (0.85)
Disposal (3.35) -
Present value movements on measurement of put option (9.92) 0.90
-------------------------------------------------------- --------------- ---------------
Balance at the end of the year 23.31 33.62
-------------------------------------------------------- --------------- ---------------
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 Shareholders at the then
market value. Prior to the option date the Group has guaranteed a
fixed dividend to the minority Shareholders. 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
22 February
Tritax EuroBox (Bremen I) Propco GmbH 89.9 2030
22 February
Tritax EuroBox (Bremen II) Propco GmbH 89.9 2030
Tritax EuroBox (Gelsenkirchen) Propco GmbH (formerly 31 August
Dietz Logistik 26. Grundbesitz GmbH) 89.9 2031
6 November
Dietz Logistik 44. Grundbesitz GmbH 89.9 2031
13 December
Dietz 23. Grundbesitz GmbH 89.9 2031
Dietz FNL 5. Grundbesitz GmbH 89.9 24 April 2032
------------------------------------------------------- ------------ -------------------
21. 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.
During the year the Group disposed of EUR125 million of interest
rate caps that were due to expire in October 2023, realising a loss
of EUR0.41 million. A new EUR25 million interest rate cap was
purchased for EUR0.53 million, with a start date on 19 October 2023
and expiring on 19 October 2025 which is in line with the maturity
of the RCF.
The table below details the interest rate caps at the current
period end.
Nominal CAP rate Start date End date
---------- ----------- ------------- -------------
EUR100m 0.50% 30/11/2018 19/10/2023
EUR25m 0.75% 28/02/2019 19/10/2023
EUR25m 2.50% 19/10/2023 19/10/2025
---------- ----------- ------------- -------------
The weighted average capped rate, excluding any margin payable,
for the Group as at the year end was 0.55% (30 September 2022:
0.65%).
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------------------- --------------- ---------------
Interest rate derivatives valuation brought forward 4.43 0.05
Purchase of interest rate cap 0.53 -
Realised loss on derivative (0.49) (0.11)
Disposal of interest rate cap/cap break receipt (1.32) (0.17)
Amortisation of derivative financial instrument (0.40) -
--------------------------------------------------------- --------------- ---------------
Fair value movement (1.70) 4.66
--------------------------------------------------------- --------------- ---------------
Non-current assets: interest rate derivatives carried
forward 1.05 4.43
--------------------------------------------------------- --------------- ---------------
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 drawn debt
hedged via interest rate derivatives equated to 100% (30 September
2022: 100%).
Fair value hierarchy
The fair value of the Group's interest rate derivatives is
recorded in the Group Statement of Financial Position and is
determined by forming an expectation that interest rates will
exceed strike rates and discounting these future cash flows at the
prevailing market rates as at the year end. This valuation
technique falls within Level 2 of the fair value hierarchy, as
defined by IFRS 13. The valuation was provided by the counterparty
to the derivatives. There have been no transfers between Level 1
and Level 2 during any of the periods, nor have there been any
transfers between Level 2 and Level 3 during any of the
periods.
22. Financial risk management
Financial instruments
The Group's principal financial assets and liabilities are those
that arise directly from its operations: trade and other
receivables, trade and other payables and cash held at bank. The
Group's other principal financial assets and liabilities are bank
borrowings and interest rate derivatives, the main purpose of which
is to finance the acquisition and development of the Group's
investment property portfolio and hedge against the risk of
interest rates rising. The book value of the Group's financial
instruments that are carried in the financial statements
approximates their fair value at the end of the year.
Risk management
The Group is exposed to market risk (including interest rate
risk), credit risk and liquidity risk. The Board of Directors
oversees the management of these risks. The Board of Directors
reviews and agrees policies for managing each of these risks, which
are summarised below.
Market risk
Market risk is the risk that the fair values of financial
instruments will fluctuate because of changes in market prices. The
financial instruments held by the Group that are affected by market
risk are principally the Group's cash balances and bank borrowings
along with interest rate derivatives entered into to mitigate
interest rate risk.
The Group monitors its interest rate exposure on a regular
basis. A sensitivity analysis was performed to ascertain the impact
on the Group Cash Flow Statement and net assets based on nominal
borrowings at the year end. The RCF was drawn by EUR77.50 million
at the year end, 31% of the total EUR250 million facility. A
sensitivity analysis performed to ascertain the impact on the Group
Cash Flow Statement and net assets shows that a 50 basis point
decrease or increase in interest rates would result in an increase
of EURnil or a decrease of EUR0.06 million to the interest payable
charge, based on the nominal borrowings at the year end. The RCF
benefits from interest rate caps, at the year-end, capping the
level of Euribor 3-months to a maximum of 0.65%. On 18th October
the RCF benefits from a new set of caps, approximately EUR80
million, with a cap of 2.72%.
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
2023 149.24 755.26 214.43 182.97 78.97 4.34 148.28 118.34 1,651.83
------------- ---------- ---------- --------- --------- --------- -------- -------------- --------- -----------
30
September
2022 170.02 877.33 238.06 227.39 63.82 24.81 181.79 111.70 1,894.92
------------- ---------- ---------- --------- --------- --------- -------- -------------- --------- -----------
Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risks
from both its leasing activities and financing activities,
including deposits with banks and financial institutions. Credit
risk is mitigated by customers being required to pay rentals in
advance under their lease obligations. The credit quality of the
customer is assessed based on an extensive credit rating scorecard
at the time of entering into a lease agreement or acquiring a let
property. The Group holds collateral by way of bank deposits
totalling EUR1.76 million (see note 16), 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 RCF is drawn in short to medium-term tranches of debt which
are repayable within 6 months from draw-down. These tranches of
debt can be rolled over provided certain conditions are met,
including covenant compliance. The Group considers that it is
highly unlikely it would be unable to exercise its right to
roll-over the debt. This is due to mitigating actions it could take
to maintain compliance with these conditions. The Directors
therefore believe that the Group has the ability to roll-over the
drawn RCF amounts when due and consequently has presented the RCF
as a non-current liability. Included within Loans and Borrowings,
at 30 September 2023, are amounts drawn-down of EUR76.25 million
relevant to the RCF (2022: EUR9.11 million).
The table below summarises the maturity profile of the Group's
financial liabilities, on the amount drawn at the year end, based
on contractual undiscounted payments, including interest
charges:
Total Less More
Carrying cash than 3-12 Between Between than
amount flows 3 months months 1-2 years 2-5 years 5 years
EURm EURm EURm EURm EURm EURm EURm
------------------------- ----------- --------- ------------ ---------- ------------- ------------- -----------
30 September 2023
Loans and borrowings1 770.10 815.08 2.40 7.19 9.59 588.98 206.92
Trade and other
payables2 27.96 27.96 26.25 - 1.71 - -
Non-current
liabilities 23.31 23.31 - - - - 23.31
Customer deposit 2.34 2.34 - - 0.11 - 2.23
------------------------- ----------- --------- ------------ ---------- ------------- ------------- -----------
823.71 868.69 28.65 7.19 11.41 588.98 232.46
------------------------- ----------- --------- ------------ ---------- ------------- ------------- -----------
Total Less More
Carrying cash than 3-12 Between Between than
amount flows 3 months months 1-2 years 2-5 years 5 years
EURm EURm EURm EURm EURm EURm EURm
------------------------- ----------- --------- ------------ ---------- ------------- ------------- -----------
30 September 2022
Loans and borrowings1 701.07 752.93 2.06 6.19 8.25 526.43 210.00
Trade and other
payables2 35.83 35.83 34.54 - 1.29 - -
Non-current
liabilities 33.62 33.62 - - - - 33.62
Customer deposit 2.05 2.05 - - 0.47 - 1.58
------------------------- ----------- --------- ------------ ---------- ------------- ------------- -----------
772.57 824.43 36.60 6.19 10.01 526.43 245.20
------------------------- ----------- --------- ------------ ---------- ------------- ------------- -----------
1 Included within the between 2 to 5 years disclosure is the
EUR77.5 million nominal value of drawn RCF (2022: EUR11
million).
2 Excludes VAT and deferred income as these are not financial liabilities
Foreign currency risk
Cash and
Investment cash Total
property equivalents currency
exposure exposure exposure
As at 30 September 2023 EURm EURm EURm
--------------------------- ------------- --------------- ------------
Pound Sterling - 0.30 0.30
Zloty - 2.33 2.33
SEK 106.50 9.36 115.86
--------------------------- ------------- --------------- ------------
Total foreign currency 106.50 11.99 118.49
--------------------------- ------------- --------------- ------------
+10% movement +5% movement -5% movement -10% movement
Foreign currency sensitivity EURm EURm EURm EURm
-------------------------------- ---------------- --------------- --------------- ----------------
Pound Sterling 0.03 0.01 (0.02) (0.03)
Zloty 0.21 0.11 (0.12) (0.26)
SEK 10.53 5.52 (6.10) (12.87)
-------------------------------- ---------------- --------------- --------------- ----------------
Cash and
Investment cash Total
property equivalents currency
exposure exposure exposure
As at 30 September 2022 EURm EURm EURm
--------------------------- ------------- --------------- ------------
Pound Sterling - 10.19 10.19
Zloty - 1.64 1.64
SEK 9.65 11.71 21.36
--------------------------- ------------- --------------- ------------
Total foreign currency 9.65 23.54 33.19
--------------------------- ------------- --------------- ------------
+10% movement +5% movement -5% movement -10% movement
Foreign currency sensitivity EURm EURm EURm EURm
-------------------------------- ---------------- --------------- --------------- ----------------
Pound Sterling 1.13 0.54 (0.49) (0.93)
Zloty 0.18 0.09 (0.08) (0.15)
SEK 2.37 1.12 (1.02) (1.94)
-------------------------------- ---------------- --------------- --------------- ----------------
The Group's functional currency is the Euro as the Group
operates in Continental Europe. The Group keeps some cash in
foreign currency to finance its working capital.
As at 30 September 2023 the Group has a cash balance of GBP 0.26
million and PLN 10.82 million, equivalent to EUR0.30 million and
EUR2.33 million respectively (30 September 2022: GBP 8.94 million
and PLN 7.97 million, equivalent to EUR10.18 million and EUR1.64
million respectively). The Group also has a cash balance of SEK
108.05 million, equivalent to EUR9.36 million as at 30 September
2023 (30 September 2022: SEK 127.44 million, equivalent to EUR11.72
million).
The Group holds investment properties in Sweden, which transact
business denominated in SEK. As such, there is currency exposure
resulting from translating their performance and net assets into
the functional currency, Euros, for each financial period and at
each balance sheet date.
Development risk
Development risk is the exposure that the Group takes in
projects where building is not yet completed. Construction risk is
mitigated by the Group by entering into fixed price contracts with
the developers/general contractors. Letting risk is usually
alleviated by entering into pre-let agreements with customers or
rental guarantees with the developers or vendors.
Taxation risk
Tax laws in these countries may change in the future,
representing an increase in tax risk to the Company.
23. 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 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 46.4%
(30 September 2022: 35.2%).
24. Customer deposit
30 September 30 September
2023 2022
Non-current liabilities EURm EURm
---------------------------------------- --------------- ---------------
Balance at the beginning of the year 2.05 2.11
Additions/(repayments) in the year 0.29 (0.06)
---------------------------------------- --------------- ---------------
Balance at the end of the year 2.34 2.05
---------------------------------------- --------------- ---------------
The balance mainly relates to a cash deposit given by the
customer for the property in Barcelona, Spain.
25. Share capital
The share capital relates to amounts subscribed for share
capital at its nominal value:
30 September 30 September 30 September 30 September
2023 2023 2022 2022
Number EURm Number EURm
------------------------------------------ --------------- --------------- --------------- ---------------
Issued and fully paid at 1 cent each
Balance at beginning of year - EUR0.01
Ordinary Shares 806,803,984 8.07 806,693,378 8.07
Shares issued in the year - - 110,606 -
------------------------------------------ --------------- --------------- --------------- ---------------
Balance at end of year 806,803,984 8.07 806,803,984 8.07
------------------------------------------ --------------- --------------- --------------- ---------------
The Group has one class of Ordinary Shares which carry no right
to fixed income.
26. 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
2023 2022
EURm EURm
-------------------------------------------------------- --------------- ---------------
Net assets per Group Statement of Financial Position 795.62 1,065.75
Ordinary Shares:
Issued share capital (number) 806,803,984 806,803,984
NAV per share (expressed in Euro per share):
Basic NAV per share 0.99 1.32
-------------------------------------------------------- --------------- ---------------
30 September 2023 30 September 2022
------------------------------------- -------------------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
EURm EURm EURm EURm EURm EURm
------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
NAV attributable to
Shareholders 795.62 795.62 795.62 1,065.75 1,065.75 1,065.75
Mark-to-market adjustments
of derivatives (1.05) (1.05) - (4.43) (4.43) -
Deferred tax adjustment 25.99 25.99 - 49.63 49.63 -
Transaction costs1 82.39 - - 83.78 - -
------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
NAV 902.95 820.56 795.62 1,194.73 1,110.95 1,065.75
------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
NAV per share in Euro 1.12 1.02 0.99 1.48 1.38 1.32
------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
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.
27. Transactions with related parties
For the year ended 30 September 2023, 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 2023 was EUR5.47 million (2022: EUR7.88 million). An
additional EUR0.24 million of the investment management fee was
capitalised during the year (2022: EUR0.19 million).
The total amount outstanding at the year end relating to the
Investment Management Agreement was EUR1.12 million (2022: EUR1.99
million).
Details of amounts paid to Directors for their services can be
found within the Directors' Remuneration Report.
The Members of the Manager that are considered as key management
personnel are James Dunlop, Henry Franklin, Petrina Austin and Phil
Redding.
During the year, the Directors received the following dividends:
Robert Orr: EUR9,773 (2022: EUR4,714); Keith Mansfield: EUR14,500
(2022: EUR14,500); Taco De Groot: EUR2,100 (2022: EUR2,100);
Eva-Lotta Sjöstedt: EUR245 (2022: EUR345); and Sarah Whitney:
EUR2,849 (2022: EUR403).
During the year, the Members of the Manager received the
following dividends: James Dunlop: EUR18,787 (2022: EUR16,348);
Henry Franklin: EUR7,104 (2022: EUR10,144); Petrina Austin:
EUR2,079 (2022: EUR1,816); and Phil Redding: EUR7,170 (2022:
EUR681).
28. Leases
As lessor
Details of the Group's leases from customers of its investment
property are found in note 6.
As lessee
The Group holds one investment property, with a carrying amount
of EUR113.75 million, on a lease which ends in 84.5 years. A
peppercorn rent is paid and hence the associated lease liability
and right-of-use asset are immaterial.
29. Subsequent events
On 29 November 2023, the Group agreed a lease at its two-unit
asset in Settimo Torinese, Italy. The new six-year lease has been
secured with the same leading Italian logistics provider which
signed a lease for the other unit in August 2023.
On 30 November 2023, the Group successfully exchanged on the
sale of the warehouse in Bochum, Germany for a consideration of
EUR46.8 million to a leading pan-European real estate investment
manager.
On 30 November 2023, the Group successfully exchanged on the
sale of the redevelopment site in Malmö, Sweden for a consideration
of EUR28.3 million to a data centre owner-occupier.
There were no other significant events occurring after the
reporting period, but before the financial statements were
authorised for issue.
Company Balance Sheet
Company registration number 11367705
At 30 September At 30 September
2023 2022
Note EURm EURm
------------------------------------ ------- ------------------ ------------------
Non-current assets
Derivative financial instruments 1.05 4.43
Trade and other receivables 5 895.41 854.03
Investment in subsidiaries 4 551.68 671.37
------------------------------------ ------- ------------------ ------------------
Total non-current assets 1,448.14 1,529.83
------------------------------------ ------- ------------------ ------------------
Current assets
Investment in subsidiaries* 4 14.23 -
Trade and other receivables 5 3.90 8.86
Cash held at bank 6 1.31 16.47
------------------------------------ ------- ------------------ ------------------
Total current assets 19.44 25.33
------------------------------------ ------- ------------------ ------------------
Total assets 1,467.58 1,555.16
------------------------------------ ------- ------------------ ------------------
Current liabilities
Trade and other payables 7 (9.03) (5.81)
Income tax liability - -
------------------------------------ ------- ------------------ ------------------
Total current liabilities (9.03) (5.81)
------------------------------------ ------- ------------------ ------------------
Non-current liabilities
Loans and borrowings 8 (770.10) (701.07)
------------------------------------ ------- ------------------ ------------------
Total non-current liabilities (770.10) (701.07)
------------------------------------ ------- ------------------ ------------------
Total liabilities (779.13) (706.88)
------------------------------------ ------- ------------------ ------------------
Total net assets 688.45 848.28
------------------------------------ ------- ------------------ ------------------
Equity
Share capital 9 8.07 8.07
Share premium reserve 597.58 597.58
Retained earnings 82.80 242.63
------------------------------------ ------- ------------------ ------------------
Total equity 688.45 848.28
------------------------------------ ------- ------------------ ------------------
The Company has taken advantage of the exemption allowed under
Section 408 of the Companies Act 2006 and has not presented its own
profit and loss account in the financial statements. The loss
attributable to the Parent Company for the year ended 30 September
2023 amounted to EUR119.49 million (2022: loss EUR11.45
million).
*See note 15 of the Group financial statements, relates to the
asset held for sale.
The financial statements were approved by the Board of Directors
on 4 December 2023 and signed on its behalf by:
Robert Orr
Director
Company Statement of Changes in Equity
For the year ended 30 September 2023
Retained
Share capital Share premium earnings Total
Note EURm EURm EURm EURm
------------------------------------ ------- ---------------- ---------------- ------------ -----------
At 1 October 2022 8.07 597.58 242.63 848.28
------------------------------------ ------- ---------------- ---------------- ------------ -----------
Net loss for the year - - (119.49) (119.49)
------------------------------------ ------- ---------------- ---------------- ------------ -----------
Total comprehensive loss - - (119.49) (119.49)
------------------------------------ ------- ---------------- ---------------- ------------ -----------
Contributions and distributions:
New share capital subscribed - - - -
Associated share issue costs - - - -
Dividends paid 3 - - (40.34) (40.34)
------------------------------------ ------- ---------------- ---------------- ------------ -----------
At 30 September 2023 8.07 597.58 82.80 688.45
------------------------------------ ------- ---------------- ---------------- ------------ -----------
Retained
Share capital Share premium earnings Total
Note EURm EURm EURm EURm
------------------------------------ ------- ---------------- ---------------- ------------ ----------
At 1 October 2021 8.07 597.46 294.42 899.95
------------------------------------ ------- ---------------- ---------------- ------------ ----------
Net loss for the year - - (11.45) (11.45)
------------------------------------ ------- ---------------- ---------------- ------------ ----------
Total comprehensive loss - - (11.45) (11.45)
------------------------------------ ------- ---------------- ---------------- ------------ ----------
Contributions and distributions:
New share capital subscribed(1) - 0.14 - 0.14
Associated share issue costs - (0.02) - (0.02)
Dividends paid 3 - - (40.34) (40.34)
------------------------------------ ------- ---------------- ---------------- ------------ ----------
At 30 September 2022 8.07 597.58 242.63 848.28
------------------------------------ ------- ---------------- ---------------- ------------ ----------
1 See note 25 of the Group accounts.
Notes to the Company Accounts
1. Accounting policies
Basis of preparation
These financial statements were prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101").
In preparing these financial statements, the Company applies the
recognition, measurement and disclosure requirements of UK-adopted
international accounting standards (UK-adopted IFRS), but makes
amendments where necessary in order to comply with the Companies
Act 2006 and has set out below where advantage of the FRS 101
disclosure exemptions has been taken.
Disclosure exemptions adopted
In preparing the financial statements the Company has taken
advantage of all applicable disclosure exemptions conferred by FRS
101. Therefore the financial statements do not include:
-- certain comparative information as otherwise required by UK-adopted IFRS;
-- certain disclosures regarding the Company's capital;
-- a statement of cash flows and related notes;
-- the effect of future accounting standards not yet adopted;
-- the disclosure of the remuneration of key management personnel; and
-- disclosure of related party transactions with other wholly
owned members of the Tritax EuroBox plc Group.
In addition, and in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures are
included in the Company's consolidated financial statements. The
financial statements do not include certain disclosures in respect
of:
-- financial instruments; and
-- fair value measurement other than certain disclosures
required as a result of recording financial instruments at fair
value.
Principal accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the periods presented, unless otherwise
stated. No newly applicable accounting standards for the current
year had any material impact on the Company.
Currency
The Company financial statements are presented in Euro which is
also the Company's functional currency.
Dividends payable for Shareholders
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the Shareholders
at an Annual General Meeting.
Financial assets and financial liabilities
Please refer to sections 4.4.1 and 4.4.2 of the Summary of
significant accounting policies of the Group accounts.
Investment in subsidiaries
The investment in subsidiary companies is included in the
Company's Balance Sheet at cost less provision for impairment.
Provision for impairment is determined by comparing the carrying
value of the subsidiary, at the reporting date, against the
recoverable amounts. The recoverable amount is the greater of its
value in use and its fair value less costs to sell. The fair value
is driven by investment property, held in the subsidiary, which is
measured using fair value hierarchy in accordance with IFRS 13. See
note 14 of the Group financial statements for further details.
Significant accounting judgements, estimates and assumptions
The preparation of the Company's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability
affected in future periods. There were no significant accounting
judgements, estimates or assumptions in preparing the financial
statements.
2. Taxation
30 September 30 September
2023 2022
EURm EURm
--------------------- --------------- ---------------
UK corporation tax 0.06 -
--------------------- --------------- ---------------
In the 3 March 2021 Budget it was announced that, from 1 April
2023, the UK main rate of corporation tax would be increased to
25%. Given that the Company's tax charge is EURnil, due to its
status as an ITC, there is no anticipated consequential effect on
the future tax charge.
The tax credit relates to a relief received owing to an
overpayment in a previous financial year.
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.
3. Dividends paid
Please refer to note 13 of the Group accounts.
4. Investment in subsidiaries
30 September 30 September
2023 2022
EURm EURm
---------------------------------------------- --------------- ---------------
At the beginning of the year 671.37 458.21
Increase in investments via share purchase 49.40 239.76
Disposals in the year(1) (19.30) -
Impairment in the year(2) (135.56) (26.60)
---------------------------------------------- --------------- ---------------
At the end of the year 565.91 671.37
---------------------------------------------- --------------- ---------------
The recoverable amount of the impaired investments is EUR352.74
million (30 September 2022: EUR208.66 million).
1 This relates to the Hammersbach disposal whereby the
subsidiary, Dietz Logistik 33. Grundbesitz GmbH, was divested.
2 Impairments to investment in subsidiaries in the current year
have resulted primarily from the reduction in the valuation of
investment properties held, the primary driver of fair value in
each subsidiary. Investment property valuation is measured using
the fair value hierarchy; see note 14 of the Group financial
statements for further detail. The impairment charge is sensitive
to the assumptions used in the valuation of the investment
property, see sensitivity table below.
-0.25% yield +0.25% yield -5% in ERV +5% in ERV
EURm EURm EURm EURm
----------------------------------------- --------------- --------------- ------------- -------------
Increase/(decrease) in the impairment
charge as at 30 September 2023 (50.14) 44.78 31.77 (36.01)
----------------------------------------- --------------- --------------- ------------- -------------
Increase/(decrease) in the impairment
charge as at 30 September 2022 (13.41) 35.05 21.15 (10.03)
----------------------------------------- --------------- --------------- ------------- -------------
The Company has the following subsidiary undertakings as at 30
September 2023:
Country of Ownership
Principal activity incorporation %
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Spain) Holdco,
S.L. Investment Holding Company Spain 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox Barcelona SLU Property Investment Spain 100%
------------------------------------ ------------------------------ ------------------- ------------
Eurobox Italy Holdco Limited Investment Holding Company Jersey 100%*
------------------------------------ ------------------------------ ------------------- ------------
Fondo Minerva Eurobox Italy** Property Investment Italy 100%
------------------------------------ ------------------------------ ------------------- ------------
Tritax Eurobox (Belgium) Holdco
NV Investment Holding Company Belgium 100%*
------------------------------------ ------------------------------ ------------------- ------------
Panton Kortenberg Vastgoed
NV Property Investment Belgium 100%
------------------------------------ ------------------------------ ------------------- ------------
Rumst Logistics NV Property Investment Belgium 100%
------------------------------------ ------------------------------ ------------------- ------------
Rumst Logistics II NV Property Investment Belgium 100%
------------------------------------ ------------------------------ ------------------- ------------
Rumst Logistics III NV Property Investment Belgium 100%
------------------------------------ ------------------------------ ------------------- ------------
Pakobo NV Property Investment Belgium 100%
------------------------------------ ------------------------------ ------------------- ------------
LCP Nivelles DC NV Property Investment Belgium 100%
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Wunstorf) Holdco
Limited*** Investment Holding Company United Kingdom 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Germany) Holdco
Limited Investment Holding Company United Kingdom 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Bochum) Propco
GmbH Property Investment Germany 94.9%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Peine) Propco
GmbH Property Investment Germany 94.9%*
------------------------------------ ------------------------------ ------------------- ------------
Dietz Logistik 33. Grundbesitz
GmbH Property Investment Germany 89.9%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Bremen I) Propco
GmbH Property Investment Germany 89.9%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Bremen II)
Propco GmbH Property Investment Germany 89.9%*
------------------------------------ ------------------------------ ------------------- ------------
Dietz Logistik 26. Grundbesitz
GmbH Property Investment Germany 89.9%*
------------------------------------ ------------------------------ ------------------- ------------
Dietz Logistik 44. Grundbesitz
GmbH Property Investment Germany 89.9%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Poland) Propco
sp. z.o.o. Property Investment Poland 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Strykow) Propco
sp. z o.o. Property Investment Poland 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Breda) PropCo
B.V. Property Investment The Netherlands 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Oberhausen)
Propco B.V. Property Investment The Netherlands 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Gothenburg)
Propco AB Property Investment Sweden 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Sweden) Holdco
Limited Investment Holding Company United Kingdom 100%*
------------------------------------ ------------------------------ ------------------- ------------
Dietz 23. Grundbesitz GmbH Property Investment Germany 89.9%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Gelsenkirchen)
Propco GmbH Property Investment Germany 89.9%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Hammersbach)
FixCo GmbH Property Investment Germany 100%*
------------------------------------ ------------------------------ ------------------- ------------
Dietz FNL 5. Grundbesitz GmbH Property Investment Germany 89.9%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Roosendaal)
PropCo B.V. Property Investment The Netherlands 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Roosendaal)
Solar B.V. Property Investment The Netherlands 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Rosersberg
I) AB Property Investment Sweden 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Rosersberg
II) AB Property Investment Sweden 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Malmo) Propco
AB Property Investment Sweden 100%
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (Malmo) Holdco
AB Property Investment Sweden 100%
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (France) Propco
SCI Investment Holding Company France 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (France) Holdco
Limited Investment Holding Company UK 100%*
------------------------------------ ------------------------------ ------------------- ------------
Tritax EuroBox (France) Minco
Limited Investment Holding Company UK 100%*
------------------------------------ ------------------------------ ------------------- ------------
* These are direct subsidiaries of the Company.
** The day-to-day operations of Fondo Minerva Eurobox Italy are
managed by Savills IM ("Savills") in accordance with the
requirements of the Italian REIF regime. The Company has the power
to replace Savills with another operator and therefore considers
the investment to be a subsidiary under IFRS 10.
*** The subsidiary Tritax EuroBox (Wunstorf) Holdco Limited is
exempt from Companies Act 2006 requirements relating to the audit
of its individual accounts by virtue of Section 479A of the Act as
this company has guaranteed these subsidiary companies under
Section 479C of the Act.
The registered addresses for the subsidiaries across the Group
are consistent based on their country of incorporation and are as
follows:
Spain entities: Calle Maria Auxiliadora, 5, Local 10, 29602,
Marbella, Málaga, Spain
Jersey entities: 26 New Street, St Helier, Jersey JE2 3RA
Italy entities: Savills Investment Management SGR S.p.A., Fondo
Minerva, Via San Paolo 7, 20121 Milano, Italy
Belgium entities: Floor 7, Louizalaan 489, 1050 Brussels,
Belgium
Germany entities: Darmstädter Straße 246, 64625 Bensheim,
Germany, and Eschersheimer Landstraße 14, 603 22 Frankfurt am Main,
Germany
Poland entities: Warsaw, ul. Pi kna 18, 05-077 Warsaw,
Poland
The Netherlands entities: Hoogoorddreef 15, 1101BA Amsterdam,
the Netherlands
Sweden entities: c/o Scandinavian Trust AB, Birger Jarlsgatan
12, 114 34 Stockholm, Sweden
United Kingdom entities: 3rd Floor, 6 Duke Street St James's,
London SW1Y 6BN, United Kingdom
France entity: 92, Avenue de Wagram, 75017 Paris, France
5. Trade and other receivables
30 September 30 September
2023 2022
EURm EURm
------------------------------------------- --------------- ---------------
Amounts receivable from Group companies 895.41 854.03
Other receivables 3.90 8.86
------------------------------------------- --------------- ---------------
899.31 862.89
------------------------------------------- --------------- ---------------
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%-5%. Interest is generally payable quarterly and,
therefore, is classified as current assets.
30 September 30 September
2023 2022
EURm EURm
---------------------- --------------- ---------------
Current assets 3.90 8.86
Non-current assets 895.41 854.03
---------------------- --------------- ---------------
899.31 862.89
---------------------- --------------- ---------------
6. Cash held at bank
30 September 30 September
2023 2022
EURm EURm
--------------------- --------------- ---------------
Cash held at bank 1.31 16.47
--------------------- --------------- ---------------
7. Trade and other payables
30 September 30 September
2023 2022
EURm EURm
---------------------------- --------------- ---------------
Trade and other payables 4.33 5.57
Accruals 4.70 0.24
---------------------------- --------------- ---------------
9.03 5.81
---------------------------- --------------- ---------------
8. Loan notes and borrowings
All external borrowings of the Group are held by the Company.
Please refer to note 19 of the Group accounts for further
details.
9. Share capital
Please refer to note 25 of the Group accounts.
10. Related party transactions
The Company has taken advantage of the exemption not to disclose
transactions with other wholly owned members of the Group as the
Company's own financial statements are presented together with its
consolidated financial statements.
Below are the amounts received by the companies which are not
wholly owned:
30 September 30 September
2023 2022
Income received from Group companies EURm EURm
---------------------------------------------- --------------- ---------------
Tritax EuroBox (Bochum) Propco GmbH 0.93 0.98
Tritax EuroBox (Peine) Propco GmbH 2.52 2.59
Dietz Logistik 33. Grundbesitz GmbH* 1.24 1.27
Tritax Eurobox (Bremen I) Propco GmbH 0.50 0.53
Tritax Eurobox (Bremen II) Propco GmbH 0.53 0.55
Dietz Logistik 26. Grundbesitz GmbH 2.82 2.96
Dietz Logistik 44. Grundbesitz GmbH 3.27 3.37
Dietz 23. Grundbesitz GmbH 1.93 0.75
Tritax EuroBox (Gelsenkirchen) Propco GmbH 0.56 0.45
Dietz FNL 5. Grundbesitz GmbH 1.51 0.32
---------------------------------------------- --------------- ---------------
15.81 13.77
---------------------------------------------- --------------- ---------------
* This subsidiary was disposed of during the financial year, see
note 14 of the Group financial statements.
Below are the amounts owed by the companies which are not wholly
owned:
Less than More than
Amount owed from Group companies as at 30 September one year one year
2023 EURm EURm
------------------------------------------------------- ------------- ------------
Tritax EuroBox (Bochum) Propco GmbH - 22.92
Tritax EuroBox (Peine) Propco GmbH - 62.24
Tritax Eurobox (Bremen I) Propco GmbH - 12.36
Tritax Eurobox (Bremen II) Propco GmbH - 13.06
Dietz Logistik 26. Grundbesitz GmbH - 84.83
Dietz Logistik 44. Grundbesitz GmbH - 80.20
Dietz 23. Grundbesitz GmbH - 77.04
Tritax EuroBox (Gelsenkirchen) Propco GmbH - 18.35
Dietz FNL 5. Grundbesitz GmbH - 42.52
------------------------------------------------------- ------------- ------------
- 413.52
--------------------------------------------------------------------- ------------
Less than More than
Amount owed from Group companies as at 30 September one year one year
2022 EURm EURm
------------------------------------------------------- ------------- ------------
Tritax EuroBox (Bochum) Propco GmbH - 24.42
Tritax EuroBox (Peine) Propco GmbH - 64.74
Dietz Logistik 33. Grundbesitz GmbH - 35.10
Tritax Eurobox (Bremen I) Propco GmbH - 13.16
Tritax Eurobox (Bremen II) Propco GmbH - 13.86
Dietz Logistik 26. Grundbesitz GmbH - 91.53
Dietz Logistik 44. Grundbesitz GmbH - 84.30
Dietz 23. Grundbesitz GmbH - 41.84
Tritax EuroBox (Gelsenkirchen) Propco GmbH - 18.95
Dietz FNL 5. Grundbesitz GmbH - 28.42
------------------------------------------------------- ------------- ------------
- 416.32
--------------------------------------------------------------------- ------------
For all other related party transactions please refer to note 27
of the Group accounts.
11. Directors' remuneration
Please refer to note 9 of the Group accounts.
12. Subsequent events
Please refer to note 29 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
2023 2022
EURm EURm
------------------------------------------------------ ---------------- ----------------
Total comprehensive profit/(loss) (attributable to
Shareholders) (223.36) 58.77
Adjustments to remove:
Changes in fair value of investment properties 285.43 (49.94)
Deferred tax adjustment (21.32) 16.68
Changes in fair value of interest rate derivatives 1.70 (4.66)
Loss on disposal of investment property 2.73 -
Loss on disposal of interest rate derivative 0.49 -
------------------------------------------------------ ---------------- ----------------
Profits to calculate EPRA Earnings Per Share 45.67 20.85
Weighted average number of Ordinary Shares 806,803,984 806,779,439
------------------------------------------------------ ---------------- ----------------
EPRA Earnings Per Share - basic and diluted 5.66 cents 2.58 cents
------------------------------------------------------ ---------------- ----------------
2. EPRA NAV measures
The Group has adopted EPRA NTA and EPRA NTA per share metrics as
its primary EPRA NAV metric measure, alongside Basic IFRS NAV, for
the year ended 30 September 2022 onwards.
30 September 2023 30 September 2022
------------------------------------- -------------------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NAV EPRA NTA EPRA NDV
EURm EURm EURm EURm EURm EURm
------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
NAV attributable
to Shareholders 795.62 795.62 795.62 1,065.75 1,065.75 1,065.75
Mark-to-market adjustments
of derivatives (1.05) (1.05) - (4.43) (4.43) -
Deferred tax adjustment 25.99 25.99 - 49.63 49.63 -
Transaction costs(1) 82.39 - - 83.78 - -
------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
NAV 902.95 820.56 795.62 1,194.73 1,110.95 1,065.75
------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
NAV per share in
Euro 1.12 1.02 0.99 1.48 1.38 1.32
------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
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
2023 2022
EURm EURm
---------------------------------------------------------- ---------------- ----------------
Investment property 1,561.85 1,765.60
Less: development properties (17.69) (214.89)
---------------------------------------------------------- ---------------- ----------------
Completed property portfolio 1544.16 1,550.71
Allowance for estimated purchaser's costs 82.39 83.78
Gross up completed property portfolio valuation (B) 1,626.55 1,634.49
---------------------------------------------------------- ---------------- ----------------
Annualised passing rental income 72.00 61.19
Property outgoings (3.36) (2.15)
Annualised net rents (A) 68.64 59.04
Notional rent expiration of rent-free periods or other
lease incentives 0.87 0.94
Topped up annualised net rents (C) 69.51 59.98
---------------------------------------------------------- ---------------- ----------------
EPRA Net Initial Yield (A/B) 4.22% 3.61%
---------------------------------------------------------- ---------------- ----------------
EPRA Topped Up Net Initial Yield (C/B) 4.27% 3.67%
---------------------------------------------------------- ---------------- ----------------
4. EPRA vacancy rate
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
-------------------------------------------------------- ---------------- ----------------
Annualised estimated rental value of vacant premises 4.86 0.19
Portfolio estimated rental value(1) 87.65 69.46
-------------------------------------------------------- ---------------- ----------------
EPRA vacancy rate 5.54% 0.28%
-------------------------------------------------------- ---------------- ----------------
1 Excludes land held for development.
80% of 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
2023 2022
EURm EURm
----------------------------------------------------------- ---------------- ----------------
Property operating costs(1) 2.55 6.10
Administrative expenses 16.35 18.18
Net service charge costs 0.81 0.35
Other operating income (1.03) (0.70)
----------------------------------------------------------- ---------------- ----------------
Total costs including vacant property costs (A) 18.68 23.93
Vacant property costs (0.81) (0.35)
----------------------------------------------------------- ---------------- ----------------
Total costs excluding vacant property costs (B) 17.87 23.58
----------------------------------------------------------- ---------------- ----------------
Gross rental income - per IFRS (C) 68.07 57.89
----------------------------------------------------------- ---------------- ----------------
Total EPRA Cost Ratio (including vacant property costs)
(A/C) 27.44% 41.34%
----------------------------------------------------------- ---------------- ----------------
Total EPRA Cost Ratio (excluding vacant property costs)
(B/C) 26.25% 40.73%
----------------------------------------------------------- ---------------- ----------------
Gross rental income including rental guarantee (D) 77.27 66.63
----------------------------------------------------------- ---------------- ----------------
Total Adjusted EPRA Cost Ratio(1) (including vacant
property costs) (A/D) 24.17% 29.46%
----------------------------------------------------------- ---------------- ----------------
Total Adjusted EPRA Cost Ratio(1) (excluding vacant
property costs) (B/D) 23.13% 28.94%
----------------------------------------------------------- ---------------- ----------------
1 Prior year adjusted for EUR4.3 million lease surrender payment
at Hammersbach - see note 12 of financial statements for further
details.
6. Capital expenditure
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------------ --------------- ---------------
Acquisition(1) 25.89 303.17
Development(1) 124.71 144.79
Investment properties(1) :
Incremental lettable space 2.42 6.32
Customer incentives(2) 3.15 4.31
Other material non-allocated types of expenditure(3) 2.90 6.93
------------------------------------------------------------ --------------- ---------------
Total 159.07 465.52
------------------------------------------------------------ --------------- ---------------
1 See note 14 of Group financial statements.
2 Fixed rental uplift and customer lease incentives after
adjusting for amortisation on rental uplift and customer lease
incentives.
3 Licence fees and rental guarantees.
The Group has no interest in joint ventures.
7. Total Return
Year ended Year ended
30 September 30 September
2023 2022
cents cents
------------------------------------------------ ---------------- ----------------
Opening EPRA NTA 137.70 134.69
Closing EPRA NTA 101.71 137.70
Increase/(decrease) in EPRA NTA (35.99) 3.01
Dividends paid 5.00 5.00
Total growth in EPRA NTA plus dividends paid (30.99) 8.01
------------------------------------------------ ---------------- ----------------
Total Return (22.51)% 5.95%
------------------------------------------------ ---------------- ----------------
8. Loan to value ("LTV") ratio
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------- ---------------- ----------------
Gross asset value (A) 1,561.85 1,765.60
--------------------------------- ---------------- ----------------
Borrowings(1) (B) 777.50 711.00
--------------------------------- ---------------- ----------------
Cash and cash equivalents (C) 52.31 90.18
--------------------------------- ---------------- ----------------
LTV ((B-C)/A) 46.43% 35.16%
--------------------------------- ---------------- ----------------
1 Nominal value of borrowings.
9. EPRA Loan to value ("LTV") ratio
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------ ---------------- ----------------
Include:
------------------------------------------ ---------------- ----------------
Borrowings from financial institutions 277.50 211.00
------------------------------------------ ---------------- ----------------
Bond loans 500.00 500.00
------------------------------------------ ---------------- ----------------
Net payables (1.38) 7.97
------------------------------------------ ---------------- ----------------
Exclude:
------------------------------------------ ---------------- ----------------
Cash and cash equivalents 52.31 90.18
------------------------------------------ ---------------- ----------------
Net debt (A): 723.81 628.79
------------------------------------------ ---------------- ----------------
Include:
------------------------------------------ ---------------- ----------------
Investment properties at fair value 1,494.86 1,541.27
------------------------------------------ ---------------- ----------------
Properties held for sale 49.30 -
------------------------------------------ ---------------- ----------------
Properties under development 17.69 224.33
------------------------------------------ ---------------- ----------------
Total property value (B): 1,561.85 1,765.60
------------------------------------------ ---------------- ----------------
EPRA LTV (A/B) 46.34% 35.61%
------------------------------------------ ---------------- ----------------
10. Dividend cover
Year ended Year ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------- ---------------- ----------------
Adjusted earnings (A) 44.47 34.21
--------------------------------------------- ---------------- ----------------
Dividends paid for the financial year (B) 40.34 40.34
--------------------------------------------- ---------------- ----------------
Dividend cover (A/B) 110.24% 84.80%
--------------------------------------------- ---------------- ----------------
11. Interest cover
Year ended Year ended
30 September 30 September
2023 2022
EUR EUR
--------------------------------------------------------------- ---------------- ----------------
Gross property income (note 6) 79.89 68.73
--------------------------------------------------------------- ---------------- ----------------
Direct property costs (note 7) (14.15) (16.53)
--------------------------------------------------------------- ---------------- ----------------
Net property income 65.74 52.20
--------------------------------------------------------------- ---------------- ----------------
Administrative cost (note 8) (16.35) (18.18)
--------------------------------------------------------------- ---------------- ----------------
Repayments (note 20) (0.97) (0.85)
--------------------------------------------------------------- ---------------- ----------------
Finance income from financial derivatives (note 12) 1.63 -
--------------------------------------------------------------- ---------------- ----------------
EBIT (A) 50.05 33.17
--------------------------------------------------------------- ---------------- ----------------
Interest payable 11.91 6.76
--------------------------------------------------------------- ---------------- ----------------
Commitment fees 0.99 1.13
--------------------------------------------------------------- ---------------- ----------------
Bank fees 0.25 0.80
--------------------------------------------------------------- ---------------- ----------------
Repayments (note 20) (0.97) (0.85)
--------------------------------------------------------------- ---------------- ----------------
Hedged portion of finance income from financial derivatives (1.78) -
--------------------------------------------------------------- ---------------- ----------------
Net finance expense (B) 10.40 7.84
--------------------------------------------------------------- ---------------- ----------------
Interest cover (A/B) 4.81 4.23
--------------------------------------------------------------- ---------------- ----------------
[1] Savills/Tritax EuroBox European Logistics Real Estate
Census.
[2] CBRE.
[3] JLL, European logistics market update, Q2 2023.
[4] Based on a straight average of rents in the leading
sub-market in each of Germany, France, the Netherlands, Belgium,
Italy, Spain, Sweden and Poland.
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END
FR DZMGZZDLGFZZ
(END) Dow Jones Newswires
December 05, 2023 02:00 ET (07:00 GMT)
Grafico Azioni Tritax Eurobox (LSE:BOXE)
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Grafico Azioni Tritax Eurobox (LSE:BOXE)
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