REG - Tritax EuroBox PLC Tritax EuroBox -BOXE - Results For The 12 Months Ended 30 September 2023
05/12/2023 07:15
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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 2023 30 September 2022 Change
Rental income €68.1m €57.9m 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) €1,561.9m €1,765.6m (14.5)%
EPRA net tangible assets (NTA) per share €1.02 €1.38 (26.1)%
IFRS NAV per share €0.99 €1.32 (25.0)%
Loan to value (LTV) ratio(3) 46.4% 35.2% 11.2 pts
Annualised rental income(4) €76.3m €74.3m 2.7%
Operational performance
30 September 2023 30 September 2022 31 March 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 lease term(6) 7.9 years 8.0 years 7.9 years
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 €68.1 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 €1,561.9 million (FY22: €1,765.6
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 €1.02 (FY22: €1.38) and a negative Total Return
of 22.5% (FY22: 6.0%).
· Portfolio reversion of 17.6% or €13.4 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 €6.3 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 €2.3
million to annual rent, and commenced an 8,841 sqm extension in Poland,
increasing the annual rent by €0.5 million.
· Commenced a 23,000 sqm speculative development in Oberhausen,
Germany; completion targeted for July 2024.
· Signed three new leases totalling €4.3 million of annual rent, an
increase of €0.6 million above previous rent or guarantees.
· Sales of asset in Hammersbach in August for c.€65 million and,
post period end, two assets in Bochum and Malmö for c.€47 million and
c.€28 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.
· €172.5 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
(https://stream.brrmedia.co.uk/broadcast/654a258a6eba922222a2efcd)
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/
(https://www.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 (mailto:tritax@kekstcnc.com)
Notes:
Further information on the Company is available at: tritaxeurobox.co.uk
(http://www.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 €1.56 billion with a rent roll of €76.3
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 €68.1 million per annum (FY22: €57.9 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 €1,561.9 million at the period end (FY22:
€1,765.6 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 €1.02, down 26% (FY22: €1.38).
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.€65 million. Post period end, we announced the
sales of assets in Bochum (Germany) for c.€47 million and in Malmö (Sweden)
for c.€28 million. Bochum was broadly in line with valuation and Malmö was
significantly ahead. These transactions brought gross sales signed so far to
c.€139 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 €11.7 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 €3.6 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 €2.3 million of new rental income, and represented a
significant driver of growth in annualised rental income, which increased to
€76.3 million (FY22: €74.3 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
€172.5 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 €150 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.€65 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.€47 million and an asset in Sweden, at Malmö, for c.€28
million. These brought the cumulative total gross sale proceeds from the
disposals to c.€139 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 €1,561.9 million as at 30 September 2023 compared with €1,765.6 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 €84.5 million (30 September 2022: €81.2
million). As a result, the portfolio reversion has increased to €13.4
million or 17.6% (30 September 2022: €7.1 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 value) FY23 FY22
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 rent) FY23 FY22
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 rent) FY23 FY22
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 rent) FY23 FY22
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 passing rent) FY23 FY22
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, location Asset management initiative Detail
Barcelona, Spain Extension Completion of a 109,083 sqm extension in November 2022, which has increased
annualised rental income by €2.3 million.
Strykow, Poland Extension and lease re-gear Commencement of a new extension for our customer Arvato, together with an
11-year re-gear of its existing lease. The extension was completed at a yield
on cost of 7.2%, increasing the annualised rental income by €0.5 million
upon completion.
Dormagen, Germany Letting Completion of a new 10-year lease to GXO at a 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 €0.5 million.
Settimo Torinese, Italy Letting Letting of unit one of the 28,287 sqm speculatively 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 €14.6 million per annum in rental income (€11.2 million leased
to customers and €3.4 million subject to rental guarantees).
Asset, location Portfolio activity Detail
Roosendaal, the Netherlands Development completion (pre-let) The second and third units (Phase 1B and 2) totalling 65,276 sqm of this
forward funded development pre-let to Lidl were completed in December 2022 and
February 2023 respectively. The units generate annualised rental income of
€3.2 million.
Rosersberg I, Sweden Development completion Completed the speculative forward funding development of 13,181 sqm in January
2023, producing annualised rental income of €1.1 million through a rental
(speculative) guarantee, which expires in February 2024. We are in discussion with potential
tenants at rents above the levels of the rental guarantees.
Dormagen, Germany Development completion Completed speculative forward funding of 36,434 sqm in March 2023, with a
10-year lease signed with GXO in early May, 17.8% ahead of the underwritten
(speculative) rental guarantee.
Settimo Torinese, Italy Development completion Practical completion reached in June 2023 of this speculative forward funding
of 28,287 sqm, with half the space leased to an Italian logistics specialist
(speculative) in August 2023. The total scheme has an ERV of €1.3 million.
Bönen, Germany Development completion (pre-let) Practical completion reached in June 2023 of this forward funded development
of 63,753 sqm, pre-let to Rhenus at an annualised rent of €4.3 million.
Rosersberg II, Sweden Development completion Practical completion reached in July 2023 of this 17,832 sqm speculative
forward funding, producing annualised rental income of €1.6 million through
(speculative) a rental guarantee, which expires in August 2024.
Oberhausen, Germany Construction commenced Construction commenced on this two-unit, 23,243 sqm speculative forward
funding in July 2023, which has the potential to produce annualised rental
(speculative) income of €2.0 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 €150 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.€65 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.€47 million, reflecting a net initial yield of 4.88%. We also
announced the sale of an asset in Malmö for c.€28 million. The sale of the
three assets generated gross sale proceeds of c.€139 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 buildings - 100% of all asset due diligence uses Tritax ESG due diligence framework - % utilisation of enhanced ESG due diligence framework The Company did not purchase 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.
- Produce and implement low-carbon baseline development specification on - Production and % utilisation of low-carbon specification The Company engaged a third-party consultant to measure the embodied carbon
all new projects
associated with its forward-funded developments in Rosersberg (Sweden) and
- % circularity certified materials Oberhausen (Germany).
- % projects undertaking a whole-life performance analysis 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 and carbon - Produce and disclose updated net zero carbon pathways - Annual review of pathway and emissions The Company finalised and disclosed its updated net zero targets and is
integrating emissions' reduction across the portfolio.
o Scope 1 and scope 2 - 2025 - % carbon risk incorporated into each asset management plan
We are continuously reviewing changes in market best practice, including
o Scope 3 (construction) - 2030 - 1.5°C Paris decarbonisation pathway alignment evolutions in the SBTi building sector guidance.
o Scope 3 (remainder of material emissions) - 2040 - Science-Based Targets initiative (SBTi) alignment (or equivalent)
- Integrate physical climate risk mitigation across asset lifecycle - % climate risk incorporated into each asset management plan The Company updated its portfolio-wide physical climate risk assessment, and
conducted a vulnerability assessment on assets exposed to natural hazards.
- Portfolio TCFD alignment
Nature and wellbeing - Year-on-year annual increase in biodiversity for standing assets - % increase in biodiversity against 2022 baseline Baseline data collection 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.
- Year-on-year increased provision of wellbeing enhancements to - % increase in provision against 2022 baseline Assessed all buildings currently without a green building certification
developments and standing assets 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 value - Publish community investment structure - Set-up and operation of community investment structure The Manager is developing a community investment structure to oversee the
social value workstream.
- Further integrate ESG criteria into supply chain procurement processes, - % utilisation of due diligence framework for suppliers
both for upstream and downstream The Manager undertook a review of the property management agreement, with key
focus on ESG services.
- Continue support for the Company's main charity - Level of financial and non-financial contributions The Company donated £25,000 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.€139m to date including the disposals of Bochum for c.€47 million and
Malmö for c.€28 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 €1,561.9 million (30 September 2022: €1,765.6
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 €68.1 million (FY22: €57.9 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 €76.3 million
(FY22: €74.3 million), including €3.4 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 €16.4 million (FY22:
€18.2 million), which primarily comprised:
· the Management Fee payable to the Manager of €5.5 million
(FY22: €7.9 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
<€1 billion 1.00% <€0.5 billion 1.30%
>€1 billion 0.75% >€0.5 billion ≤€2 billion 1.15%
>€2 billion 1.00%
The total cost of debt (net of income earned on interest rate derivatives) for
the year was €10.1 million (FY22: €8.7 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 €40 million portion with a two-year maturity co-terminus
with the remaining term of the RCF and a €40 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 €243.0
million (FY22: gain of €76.6 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 €44.5 million (FY22: €34.2 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 €0.99 (30 September 2022:
€1.32). The EPRA NTA per share at the year-end was €1.02 (30 September
2022: €1.38). 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 €777 million. This
resulted in an LTV ratio of 46.4% (30 September 2022: 35.2%), with €172.5
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:
Declared Amount per share In respect of Paid/to be paid
9 February 2023 1.25 cents 1 October to 31 December 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
5 December 2023 1.25 cents 1 July to 30 September 2023 12 January 2024
The total dividend for the year was 5.00 cents per share or €40.3 million
(FY22: €40.3 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 2023: 5.00 cents per share
Dividends paid to shareholders and declared in relation to the period. payout of 85% of Adjusted Earnings.
2022: 5.00 cents per share
While keeping the Dividend per share unchanged from the prior year, the
earnings growth from the business supported the dividend being fully covered
for the year.
2. Total Return (TR) The return calculated from the dividends paid has been more than offset by the 2023: (22.5)%
Total Return measures the change in the EPRA Net Tangible Assets (EPRA NTA) decline in valuation, which was driven by inflation and the resulting impacts
over the period plus dividends paid. on interest rates. 2022: 6.0%
3. Basic Net Asset Value Inflation and the resulting impacts on interest rates have been the key 2023: €795.6 million (€0.99 per share)
Net asset value in IFRS GAAP. drivers of this valuation movement, which could not be fully offset by strong
market rental growth and indexation. 2022: €1,065.8 million (€1.32 per share)
4. Adjusted earnings Adjusted Earnings increased by 30.0% in the year, reflecting the full-year €44.5 million (5.51 cents per share)
EPRA earnings, adjusted to include licence fees and rental guarantees impact on rental income from acquisitions in the prior year and a 10% decrease
receivable on forward funded development assets and for other earnings not in administrative expenses. €34.2 million (4.24 cents per share)
supported by cash flows.
5. Loan to value ratio (LTV) The lower portfolio valuation, ongoing capital expenditure and working capital 2023: 46.4%
The proportion of our gross asset value that is funded by net borrowings movements largely offset the benefit of the sales proceeds from the disposal
(excluding cash). programme. The Company remains comfortably below the LTV ratio covenant of 2022: 35.2%
65%. Including the disposals of Bochum and Malmö, the pro forma LTV is 44.0%.
6. Weighted average unexpired lease term (WAULT) The Company has maintained a WAULT of greater than five years across the 2023: 7.9 years
The portfolio average of the remaining number of years, weighted by annual portfolio, in accordance with typical lease lengths in Continental Europe. The
(9.6 years to term.)
passing rents, until the sooner of the lease expiry or the customer's break WAULT to expiry is 9.6 years.
option. 2022: 8.0 years
(9.3 years to term)
7. Dividend cover The 30.0% growth in Adjusted Earnings, combined with maintaining a dividend 2023: 110.2%
Adjusted Earnings as a proportion of the dividend declared for the financial per share of 5.00 cents, drove an increase in dividend cover to 110.2%.
period. 2022: 84.8%
8. Interest cover The Company remains comfortably above its interest cover ratio covenant of 2023: 4.8x
The ratio of consolidated earnings before interest and taxation to 1.5x.
consolidated net finance costs in respect of any measurement period. 2022: 4.2x
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 2023: 4.5%
Like-for-like rental growth (excluding extensions; including extensions: 7.8%) initiatives and indexation.
compares the growth of the rental income of the portfolio that has been 2022: 3.6%
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 2023: €903.0 million
Basic NAV adjusted for mark-to-market valuation of derivatives, deferred tax metric reflects what would be needed to recreate the current portfolio of the
and transaction costs (real estate transfer tax and purchaser's costs). company. 2022: €1,194.7 million
2. EPRA Net Tangible Assets (EPRA NTA) Assumes that entities buy and sell assets, thereby crystallising certain 2023: €820.6 million
Basic NAV adjusted to remove the fair values of financial instruments and levels of unavoidable deferred tax.
deferred taxes. This excludes transaction costs. 2022: €1,111.0 million
3. EPRA Net Disposal Value (EPRA NDV) Represents the shareholders' value under a disposal scenario, where deferred 2023: €795.6 million
Equivalent to IFRS NAV, as this includes the fair values of financial tax, financial instruments and certain other adjustments are calculated to the
instruments and deferred taxes. full extent of their liability, net of any resulting tax. 2022: €1,065.8 million
4. EPRA Earnings A key measure of the Company's underlying results and an indication of the 2023: €45.7 million
Earnings from operational activities. extent to which current dividend payments are supported by earnings.
2022: €20.9 million
5. EPRA Net Initial Yield (NIY) This measure should make it easier for investors to judge for themselves how 2023: 4.2%
Annualised rental income based on the cash rents passing at the balance sheet the valuations of portfolios compare.
date, less non-recoverable property operating expenses, divided by the market 2022: 3.6%
value of the property, increased with (estimated) purchasers' costs.
6. EPRA 'Topped-up' NIY This measure should make it easier for investors to judge for themselves how 2023: 4.3%
This measure incorporates an adjustment to the EPRA NIY in respect of the the valuations of portfolios compare.
expiration of rent-free periods (or other unexpired lease incentives such as 2022: 3.7%
discounted rent periods and step rents).
7. EPRA Vacancy Rate A 'pure' (%) measure of investment property space that is vacant, based on 2023: 5.5%
Estimated Market Rental Value (ERV) of vacant space divided by ERV of the ERV.
whole portfolio. 2022: 0.3%
8. EPRA Cost Ratio A key measure to enable meaningful measurement of the changes in a company's 2033: 27.4%
Administrative and operating costs (including and excluding costs of direct operating costs.
vacancy) divided by gross rental income. 2022: 41.3%
9. Adjusted EPRA Cost Ratio This ratio includes licence fee income and rental guarantees and excludes 2023: 24.2%
EPRA Cost Ratio adjusted for non-operational items. exceptional items of a capital nature.
2022: 29.5%
10. EPRA Loan to value (LTV) ratio The EPRA LTV introduces a consistent and comparable metric for the sector, 2023: 46.3%
The proportion of our gross asset value funded by net borrowings with the aim to assess the gearing of the shareholder equity within a real
(incorporating net payables). estate company. 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
Note Year ended Year ended
30 September 30 September
2023 2022
€m €m
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 (229.79) 52.47
Shareholders
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
Note 30 September 30 September
2023 2022
€m €m
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
Note Share Share Translation Retained Total
capital premium reserve earnings €m
€m €m €m €m
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
Note Share Share Translation Retained Total
capital premium reserve earnings €m
€m €m €m €m
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
Note For the For the
year ended year ended
30 September 30 September
2023 2022
€m €m
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 €52.31 million. It also
had undrawn amounts under its unsecured Revolving Credit Facility ("RCF") of a
further €172.50 million at the date of approval of these financial
statements. Of the Group's total loans and facilities (RCF, Green Bond and
USPP), €250 million mature in 2025, €500 million in 2026, €100 million
in 2029, €50 million in 2032 and €50 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
€m €m
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 (€m) Belgium Germany Spain Italy Poland The Sweden Total
Netherlands
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:
Less than Between 1 Between 2 Between 3 Between 4 More than Total
1 year and 2 years and 3 years and 4 years and 5 years 5 years €m
€m €m €m €m €m €m
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 (€9.73 million) representing more than 10% of rental
income during the year (2022: two customers €7.75 million and €6.29
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
€m €m
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
€m €m
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 €5.47 million (30 September 2022: €7.88 million (see note 27)).
The remaining €3.82 million (2022: €3.98 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 €0.29
million (2022: unrealised foreign exchange currency gain of €0.28 million
and offset by realised foreign exchange currency loss of €0.08 million).
9. Directors' remuneration
Year ended Year ended
30 September 30 September
2023 2022
€m €m
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
€m €m
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 €12.90
million (30 September 2022: €7.89 million), of which €nil was capitalised
in both periods, and amortisation of loan arrangement fees of €2.55 million
(30 September 2022: €2.43 million), of which €nil million (30 September
2022: €2.40 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
€m €m
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 €nil 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 €nil, 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
€m €m
(Loss)/profit before taxation (242.97) 76.64
Theoretical tax at UK corporation tax rate of blended 22% (30 September 2022: 53.45 (14.56)
19%)
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
€m €m
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
€m €m
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 €16.1 million (2022:
€9.6 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:
For the year ended 30 September 2023 Net profit Weighted Earnings
attributable average Per Share
to Ordinary number of cents
Shareholders Ordinary Shares 1
€m '000
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 285.43
construction (note 14)
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 9.20
income - settled via cash2
Finance income from financial derivatives (1.63)
Adjusted EPS 44.47 806,804 5.51
For the year ended 30 September 2022 Net profit Weighted Earnings
attributable average Per Share
to Ordinary number of cents
Shareholders Ordinary Shares1
€m '000
Basic EPS 58.77 806,779 7.28
Adjustments to remove:
Deferred tax charge and capital gains tax on disposal of investment properties 16.68
(note 11)
Changes in fair value of investment properties and investment property under (49.94)
construction (note 14)
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 8.74
income - settled via cash2
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
€m €m
Final dividend in respect of year ended 30 September 2022 at 1.25 cents per 10.08 10.08
Ordinary Share
(30 September 2021: 1.25 cents)
First interim dividend in respect of year ended 30 September 2023 at 1.25 10.09 10.08
cents per Ordinary Share (30 September 2022: 1.25 cents)
Second interim dividend in respect of year ended 30 September 2023 at 1.25 10.08 10.09
cents per Ordinary Share (30 September 2022: 1.25 cents)
Third interim dividend in respect of year ended 30 September 2023 at 1.25 10.09 10.09
cents per Ordinary Share (30 September 2022: 1.25 cents)
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 €40.34 million (30 September 2022: €40.34 million) dividends
declared for the year, €15.09 million (30 September 2022: €8.79 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
€132,055 (period ended 30 September 2022: €124,800). 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 Investment
properties properties properties
completed under total
€m construction €m
€m
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 339.87 (339.87) -
properties
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 Investment
properties properties properties
completed under total
€m construction €m
€m
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 (1.30) 1.30 -
construction
Transfer from investment properties under construction to investment 70.17 (70.17) -
properties
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 €0.64 million (30 September
2022: €13.81 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 €13.30 million (30 September 2022:
€10.94 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 €6.16 million (30 September 2022: €93.08 million) and unrealised losses
of €291.59 million (30 September 2022: €43.14 million).
30 September 30 September
2023 2022
€m €m
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 €22.9 million of outstanding capital
commitments in relation to its forward funded development assets (30 September
2022: €123.7 million):
• Stryków €1.8 million; and
• Oberhausen €21.1 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 €33 and €104 per square metre, per
annum (2022: €44 and €94). 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
€m €m €m €m
Increase/(decrease) in the fair value of investment properties as at 30 85.45 (76.19) (52.79) 53.08
September 2023
Increase/(decrease) in the fair value of investment properties under 5.05 (4.56) (4.83) 4.83
construction and land as at 30 September 2023
Increase/(decrease) in the fair value of investment properties as at 30 95.69 (84.74) (31.67) 33.82
September 2022
Increase/(decrease) in the fair value of investment properties under 19.45 (17.48) (14.07) 15.14
construction as at 30 September 2022
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
€m €m
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
Non-current trade and other receivables 30 September 30 September
2023 2022
€m €m
Cash in public institutions 1.76 1.17
The cash in public institutions is a deposit of €1.76 million given by the
customer for the property in Barcelona, Spain.
Current trade and other receivables 30 September 30 September
2023 2022
€m €m
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 €6.75 million
receivable from a tenant, and two subsidies totalling €11.58 million
receivable from KfW, the German development bank, on recently completed
developments (30 September 2022: €nil).
2 VAT receivable includes VAT on capital expenditure across the
developments and a reclaim on the purchase of the property in Italy of €0.93
million (30 September 2022: €1.00 million).
The following table sets out the ageing of trade receivables as at 30
September 2023:
Past due but not impaired 30 September 30 September
2023 2022
€m €m
<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
€m €m
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 €9.23 million
(30 September 2022: €24.40 million).
18. Trade and other payables
Non-current trade and other payables 30 September 30 September
2023 2022
€m €m
Other payables 1.71 1.29
Current trade and other payables 30 September 30 September
2023 2022
€m €m
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
€m €m
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 €200 million US private placement debt split into three
tranches: €100 million with a coupon of 1.216% maturing in 2029, €50
million with a coupon of 1.449% maturing in 2032, and €50 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 Maturity date
€m
Banco Santander 58.8 19 October 2025
BNP Paribas 58.8 19 October 2025
Bank of China 58.8 19 October 2025
Bank of America 58.8 19 October 2025
Banco de Sabadell 14.8 19 October 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:
Bank borrowings drawn 30 September 30 September
2023 2022
€m €m
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
Loan notes 30 September 30 September
2023 2022
€m €m
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
Drawn Undrawn Total debt
€m €m available
€m
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
Drawn Undrawn Total debt
€m €m available
€m
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
€m €m €m €m
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 €440.30
million (30 September 2022: €422.55 million) and Level 2 was €179.74
million (2022: €180.70 million).
20. Other liabilities
30 September 30 September
2023 2022
€m €m
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:
Companies Ownership Date of maturity
% of option
Tritax EuroBox (Bochum) Propco GmbH 94.9 5 April 2029
Tritax EuroBox (Peine) Propco GmbH 94.9 28 March 2029
Tritax EuroBox (Bremen I) Propco GmbH 89.9 22 February 2030
Tritax EuroBox (Bremen II) Propco GmbH 89.9 22 February 2030
Tritax EuroBox (Gelsenkirchen) Propco GmbH (formerly Dietz Logistik 26. 89.9 31 August 2031
Grundbesitz GmbH)
Dietz Logistik 44. Grundbesitz GmbH 89.9 6 November 2031
Dietz 23. Grundbesitz GmbH 89.9 13 December 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 €125 million of interest rate caps
that were due to expire in October 2023, realising a loss of €0.41 million.
A new €25 million interest rate cap was purchased for €0.53 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
€100m 0.50% 30/11/2018 19/10/2023
€25m 0.75% 28/02/2019 19/10/2023
€25m 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
€m €m
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 €77.50 million at the year end, 31% of the total €250
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 €nil
or a decrease of €0.06 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 €80
million, with a cap of 2.72%.
The Group currently operates in eight countries. The current distribution of
total assets is as follows:
Total assets Belgium Germany Spain Italy Poland UK The Sweden Total
Netherlands
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 €1.76 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
€76.25 million relevant to the RCF (2022: €9.11 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:
Carrying Total Less than 3-12 Between Between More than
amount cash flows 3 months months 1-2 years 2-5 years 5 years
€m €m €m €m €m €m €m
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
Carrying Total Less than 3-12 Between Between More than
amount cash flows 3 months months 1-2 years 2-5 years 5 years
€m €m €m €m €m €m €m
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 €77.5
million nominal value of drawn RCF (2022: €11 million).
2 Excludes VAT and deferred income as these are not financial
liabilities
Foreign currency risk
As at 30 September 2023 Investment Cash and cash Total
property equivalents currency
exposure exposure exposure
€m €m €m
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
Foreign currency sensitivity +10% movement +5% movement -5% movement -10% movement
€m €m €m €m
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)
As at 30 September 2022 Investment Cash and cash Total
property equivalents currency
exposure exposure exposure
€m €m €m
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
Foreign currency sensitivity +10% movement +5% movement -5% movement -10% movement
€m €m €m €m
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 €0.30 million and €2.33 million
respectively (30 September 2022: GBP 8.94 million and PLN 7.97 million,
equivalent to €10.18 million and €1.64 million respectively). The Group
also has a cash balance of SEK 108.05 million, equivalent to €9.36 million
as at 30 September 2023 (30 September 2022: SEK 127.44 million, equivalent to
€11.72 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
Non-current liabilities 30 September 30 September
2023 2022
€m €m
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 €m Number €m
Issued and fully paid at 1 cent each
Balance at beginning of year - €0.01 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
€m €m
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
€m €m €m €m €m €m
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 €5.47 million (2022: €7.88 million). An
additional €0.24 million of the investment management fee was capitalised
during the year (2022: €0.19 million).
The total amount outstanding at the year end relating to the Investment
Management Agreement was €1.12 million (2022: €1.99 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:
€9,773 (2022: €4,714); Keith Mansfield: €14,500 (2022: €14,500); Taco
De Groot: €2,100 (2022: €2,100); Eva-Lotta Sjöstedt: €245 (2022:
€345); and Sarah Whitney: €2,849 (2022: €403).
During the year, the Members of the Manager received the following dividends:
James Dunlop: €18,787 (2022: €16,348); Henry Franklin: €7,104 (2022:
€10,144); Petrina Austin: €2,079 (2022: €1,816); and Phil Redding:
€7,170 (2022: €681).
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 €113.75
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 €46.8 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 €28.3 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
Note At 30 September At 30 September
2023 2022
€m €m
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 €119.49 million (2022: loss
€11.45 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
Share capital Share premium Retained earnings Total
Note €m €m €m €m
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
Share capital Share premium Retained earnings Total
Note €m €m €m €m
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
€m €m
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 €nil, 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 €nil 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
€m €m
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 €352.74 million (30
September 2022: €208.66 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
€m €m €m €m
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:
Principal activity Country of incorporation Ownership %
Tritax EuroBox (Spain) Holdco, S.L. Investment Holding Company Spain 100%*
Tritax EuroBox Barcelona SLU Property Investment Spain 100%
Eurobox Italy Holdco Limited Investment Holding Company Jersey 100%*
Fondo Minerva Eurobox Italy** Property Investment Italy 100%
Tritax Eurobox (Belgium) Holdco NV Investment Holding Company Belgium 100%*
Panton Kortenberg Vastgoed NV Property Investment Belgium 100%
Rumst Logistics NV Property Investment Belgium 100%
Rumst Logistics II NV Property Investment Belgium 100%
Rumst Logistics III NV Property Investment Belgium 100%
Pakobo NV Property Investment Belgium 100%
LCP Nivelles DC NV Property Investment Belgium 100%
Tritax EuroBox (Wunstorf) Holdco 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. Piękna 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
€m €m
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
€m €m
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
€m €m
Cash held at bank 1.31 16.47
7. Trade and other payables
30 September 30 September
2023 2022
€m €m
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:
Income received from Group companies 30 September 30 September
2023 2022
€m €m
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:
Amount owed from Group companies as at 30 September 2023 Less than More than
one year one year
€m €m
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
Amount owed from Group companies as at 30 September 2022 Less than More than
one year one year
€m €m
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
€m €m
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
€m €m €m €m €m €m
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
€m €m
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
€m €m
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
€m €m
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 €4.3 million lease surrender payment at
Hammersbach - see note 12 of financial statements for further details.
6. Capital expenditure
30 September 30 September
2023 2022
€m €m
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
€m €m
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
€m €m
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
€m €m
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
€ €
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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AnnouncementREG - Barclays PLC Tritax EuroBox PLC - Form 8.3 - TRITAX BIG BOX REIT PLC
AnnouncementREG - Tritax EuroBox PLC Tritax EuroBox -BOXE - EXCHANGE RATE FOR DIVIDEND PAYMENT
AnnouncementREG - Tritax EuroBox PLC Tritax EuroBox -BOXE - Tritax EuroBox Fitch outlook revised up to Stable
Announcement